10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2020

OR

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _________ to _________

Commission File Number: 001-38903

POSTAL REALTY TRUST, INC.

(Exact name of registrant as specified in its charter)

Maryland	83-2586114
(State or other jurisdiction of	(I.R.S. Employer
incorporation or organization)	Identification No.)

75 Columbia Avenue

Cedarhurst, NY 11516

(Address of principal executive offices) (Zip Code)

Registrant’s telephone number, including area code: (516) 295-7820

Former name, former address and former fiscal year, if changed since last report: Not applicable.

Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class	Trading Symbol(s)	Name of Each Exchange on Which Registered
Class A Common Stock, par value $0.01 per share	PSTL	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☒	Smaller reporting company	☒
		Emerging growth company	☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of June 25, 2020, the registrant had 5,381,564 shares of Class A common stock outstanding.

Explanatory Note

As previously disclosed in the Current Report on Form 8-K filed by Postal Realty Trust, Inc. (the “Company”) with the Securities and Exchange Commission (the “SEC”) on May 15, 2020, the filing of the Company’s Quarterly Report on Form 10-Q for the period ended March 31, 2020 (the “Form 10-Q”) was delayed as a result of the disruptions caused by the novel coronavirus (“COVID-19”) pandemic, including the impact of (a) certain employees working from home, which slowed the Company’s routine quarterly close process, (b) delays in communications with various counterparties and (c) the need to perform additional analyses and procedures relating to the COVID-19 pandemic’s impact on the Company’s business and operations and on the financial statements included in the Form 10-Q. The Company has relied on the “Order Under Section 36 of the Securities Exchange Act Modifying Exemptions from the Reporting and Proxy Delivery Requirements for Public Companies” dated March 25, 2020 (Release No. 34-88465), issued by the SEC in light of the COVID-19 pandemic, to delay the filing of the Form 10-Q.

TABLE OF CONTENTS

		Page
PART I. FINANCIAL INFORMATION
Item 1.	Financial Statements	1
Consolidated Balance Sheets as of March 31, 2020 and December 31, 2019		1
Consolidated and Combined Consolidated Statements of Operations for the Three Months Ended March 31, 2020 and 2019		2
Consolidated and Combined Consolidated Statements of Equity (Deficit) for the Three Months Ended March 31, 2020 and 2019		3
Consolidated and Combined Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2020 and 2019		4
Notes to Consolidated and Combined Consolidated Financial Statements		5
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	19
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	32
Item 4.	Controls and Procedures	32
PART II. OTHER INFORMATION
Item 1.	Legal Proceedings	33
Item 1A.	Risk Factors	33
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	35
Item 3.	Defaults Upon Senior Securities	35
Item 4.	Mine Safety Disclosures	35
Item 5.	Other Information	35
Item 6.	Exhibits	36

i

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

POSTAL REALTY TRUST, INC.

CONSOLIDATED BALANCE SHEETS

	March 31, 2020			December 31, 2019
	(Unaudited)
Assets
Real estate properties
Land	$	29,971,741		$	25,147,732
Building and improvements		117,541,035			92,873,637
Tenant improvements		2,850,042			2,562,293
Total real estate properties		150,362,818			120,583,662
Less: Accumulated depreciation		(9,730,056	)		(8,813,579	)
Total real estate properties, net		140,632,762			111,770,083
Cash		2,844,040			12,475,537
Rent and other receivables		1,741,169			1,710,314
Prepaid expenses and other assets, net		3,734,438			2,752,862
Escrow and reserves		691,766			708,066
Deferred rent receivable		46,052			33,344
In-place lease intangibles, net		8,660,413			7,315,867
Above market leases, net		26,166			22,124
Total Assets	$	158,376,806		$	136,788,197
Liabilities and Equity
Liabilities:
Secured borrowings, net	$	3,184,519		$	3,211,004
Revolving credit facility		68,000,000			54,000,000
Accounts payable, accrued expenses and other		3,220,430			3,152,799
Below market leases, net		7,899,853			6,601,119
Total Liabilities		82,304,802			66,964,922
Commitments and Contingencies
Equity:
Class A common stock, par value $0.01 per share; 500,000,000 shares authorized, 5,392,906 and 5,285,904 shares issued and outstanding as of March 31, 2020 and December 31, 2019, respectively		53,929			52,859
Class B common stock, par value $0.01 per share; 27,206 shares authorized: 27,206 shares issued and outstanding as of March 31, 2020 and December 31, 2019		272			272
Additional paid-in capital		54,187,591			51,396,226
Accumulated deficit		(4,176,857	)		(2,575,754	)
Total Stockholders’ Equity		50,064,935			48,873,603
Operating Partnership unitholders’ non-controlling interests		26,007,069			20,949,672
Total Equity		76,072,004			69,823,275
Total Liabilities and Equity	$	158,376,806		$	136,788,197

The accompanying notes are an integral part of these unaudited consolidated financial statements.

1

POSTAL REALTY TRUST, INC.

CONSOLIDATED AND COMBINED CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)

	For the Three Months Ended March 31,
	2020			2019
Revenues:
Rental income	$	4,300,771		$	1,492,386
Tenant reimbursements		601,346			236,856
Fee and other income		295,519			286,926
Total revenues		5,197,636			2,016,168
Operating expenses:
Real estate taxes		641,944			249,789
Property operating expenses		407,048			251,706
General and administrative		2,301,543			376,891
Depreciation and amortization		2,034,868			480,443
Total operating expenses		5,385,403			1,358,829
(Loss) income from operations		(187,767	)		657,339
Interest expense, net:
Contractual interest expense		(728,226	)		(358,467	)
Write-off and amortization of deferred financing fees		(104,462	)		(3,181	)
Interest income		826			1,134
Total interest expense, net		(831,862	)		(360,514	)
(Loss) income before income tax expense		(1,019,629	)		296,825
Income tax expense		(10,197	)		(39,749	)
Net (loss) income		(1,029,826	)		257,076
Net income attributable to non-controlling interest in properties		—			(2,843	)
Net income attributable to Predecessor		—		$	254,233
Net loss attributable to Operating Partnership unitholders’ non-controlling interests		352,071
Net (loss) attributable to common stockholders		(677,755	)
Net (loss) per share:
Basic and Diluted	$	(0.14	)
Weighted average common shares outstanding:
Basic and Diluted		5,174,569

The accompanying notes are an integral part of these unaudited consolidated and combined consolidated financial statements.

2

POSTAL REALTY TRUST, INC.

CONSOLIDATED AND COMBINED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

(UNAUDITED)

	Number of shares of Common Stock		Common Stock		Additional Paid-in Capital			Accumulated Equity (Deficit)			Member’s Equity (Deficit)			Total Stockholders’ & Predecessor equity			Operating Partnership unitholders’ non-controlling interests			Non-controlling interests in properties			Total Equity
Balance - December 31, 2018		-	$	4,000,200	$	3,441,493		$	(11,003,876	)	$	(2,095,823	)	$	(5,658,006	)	$	-		$	44,593		$	(5,613,413	)
Capital contributions		-		-		397,121			-			1,377,758			1,774,879			-			-			1,774,879
Distributions and dividends		-		-		(150,000	)		-			(1,067,515	)		(1,217,515	)		-			(521	)		(1,218,036	)
Net income (loss)		-		-		-			(173,554	)		427,787			254,233			-			2,843			257,076
Balance – March 31, 2019		-	$	4,000,200	$	3,688,614		$	(11,177,430	)	$	(1,357,793	)	$	(4,846,409	)	$	-		$	46,915		$	(4,799,494	)
Balance - December 31, 2019		5,313,110	$	53,131	$	51,396,226		$	(2,575,754	)	$	-		$	48,873,603		$	20,949,672		$	-		$	69,823,275
Issuance of OP Units in connection with transaction		-		-		-			-			-			-			7,921,828			-			7,921,828
Issuance and amortization of equity-based compensation		103,463		1,035		519,215			-			-			520,250			185,015			-			705,265
Issuance and amortization under the Employee Stock Purchase Plan (“ESPP”)		3,538		35		53,160			-			-			53,195			-			-			53,195
Dividends declared ($0.17 per share)		-		-		-			(923,348	)		-			(923,348	)		(478,385	)		-			(1,401,733	)
Net loss		-		-		-			(677,755	)		-			(677,755	)		(352,071	)		-			(1,029,826	)
Reallocation of non-controlling interest		-		-		2,218,990			-			-			2,218,990			(2,218,990	)		-			-
Balance – March 31, 2020		5,420,111	$	54,201	$	54,187,591		$	(4,176,857	)	$	-		$	50,064,935		$	26,007,069		$	-		$	76,072,004

The accompanying notes are an integral part of these unaudited consolidated and combined consolidated financial statements.

3

 POSTAL REALTY TRUST, INC.

CONSOLIDATED AND COMBINED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

	For the Three Months Ended March 31,
	2020			2019
Cash flows from operating activities:
Net (loss) income	$	(1,029,826	)	$	257,076
Adjustments to reconcile net (loss) income to net cash provided by operating activities:
Depreciation		926,096			264,150
Amortization of in-place intangibles		1,108,772			216,293
Write-off and amortization of deferred financing costs		104,462			3,179
Amortization of above/below market leases		(316,275	)		(85,755	)
Amortization of intangible liability		(1,105	)		—
Deferred rent receivable		(12,708	)		(5,166	)
Deferred rent expense payable		4,771			532
Deferred tax liability		—			(65,895	)
Equity-based compensation		713,810			—
Changes in assets and liabilities:
Rent and other receivables		(14,372	)		109,044
Prepaid expenses and other assets		103,336			2,067
Accounts payable, accrued expenses and other		(199,579	)		(178,212	)
Net cash provided by operating activities		1,387,382			517,313
Cash flows from investing activities:
Acquisition of real estate		(22,410,688	)		(645,120	)
Acquisition and other deposits		(689,250	)		—
Capital improvements		(48,295	)		(11,840	)
Other investing activities		(63,167	)		—
Net cash used in investing activities		(23,211,400	)		(656,960	)
Cash flows from financing activities:
Repayments of secured borrowings		(27,010	)		(284,801	)
Proceeds from revolving credit facility		14,000,000			—
Debt issuance costs		(386,233	)		—
Capital contributions		—			1,774,879
Distributions and dividends		(1,401,733	)		(1,218,036	)
Other financing activities		(8,803	)		—
Net cash provided by financing activities		12,176,221			272,042
Net (decrease) increase in Cash and Escrows and Reserves		(9,647,797	)		132,395
Cash and Escrows and Reserves at the beginning of period		13,183,603			861,875
Cash and Escrow and Reserves at the end of period	$	3,535,806		$	994,270

The accompanying notes are an integral part of these unaudited consolidated and combined consolidated financial statements.

4

POSTAL REALTY TRUST, INC.

NOTES TO CONSOLIDATED AND COMBINED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

Note 1. Organization and Description of Business

Postal Realty Trust, Inc. (the “Company” “we”, “us”, or “our”) was organized in the state of Maryland on November 19, 2018. On May 17, 2019, the Company completed its initial public offering (“IPO”) of the Company’s Class A common stock, par value $0.01 per share (our “Class A common stock”). The Company contributed the net proceeds from the IPO to Postal Realty LP, a Delaware limited partnership (the “Operating Partnership”), in exchange for common units of limited partnership interest in the Operating Partnership (each, an “OP Unit,” and collectively, the “OP Units”). Both the Company and the Operating Partnership commenced operations upon completion of the IPO and certain related formation transactions (the “Formation Transactions”). Prior to the completion of the IPO and the Formation Transactions, the Company had no operations.

The Company’s interest in the Operating Partnership entitles the Company to share in distributions from, and allocations of profits and losses of, the Operating Partnership in proportion to the Company’s percentage ownership of OP Units. As the sole general partner of the Operating Partnership, the Company has the exclusive power under the partnership agreement to manage and conduct the Operating Partnership’s business, subject to limited approval and voting rights of the limited partners. As of March 31, 2020, the Company held an approximately 65.8% interest in the Operating Partnership. As the sole general partner and the majority interest holder, the Company consolidates the financial position and results of operations of the Operating Partnership. The Operating Partnership is considered a variable interest entity (“VIE”) in which we are the primary beneficiary.

Our Predecessor (the “Predecessor”) is a combination of limited liability companies (the “LLCs”), one C-Corporation (“UPH”), one S-Corporation (“NPM”) and one limited partnership. The entities that comprise the Predecessor were majority owned and controlled by Mr. Andrew Spodek and his affiliates and were acquired by contribution to, or merger with, the Company and the Operating Partnership.

The Predecessor does not represent a legal entity. The Predecessor and its related assets and liabilities were under common control and were contributed to the Operating Partnership in connection with the Company’s IPO.

For the periods prior to May 17, 2019, the Predecessor, through the LLCs, UPH and the limited partnership, owned 190 post office properties in 33 states.

NPM was formed on November 17, 2004, for the purpose of managing commercial real estate properties.

As of March 31, 2020, the Company owned a portfolio of 549 postal properties located in 45 states. Our properties were leased to a single tenant, the United States Postal Service (the “USPS”), other than a de minimis non-postal tenant that shares space in a building leased to the USPS.

In addition, through its taxable REIT subsidiary (“TRS”), Postal Realty Management TRS, LLC (“PRM”), the Company provides fee-based third party property management services for an additional 401 postal properties, which are owned by Mr. Spodek and his affiliates, his family members and their partners.

The Company, until May 15, 2019, was authorized to issue up to 600,000,000 shares of common stock, par value $0.01 per share. On May 15, 2019, in connection with the IPO, the Company amended its articles of incorporation such that the Company is currently authorized to issue up to 500,000,000 shares of Class A common stock, 27,206 shares of Class B common stock, $0.01 par value per share (our “Class B common stock” or “Voting Equivalency stock”), and up to 100,000,000 shares of preferred stock.

The Company believes it has been organized in conformity with, and has operated in a manner that has enabled it to meet, the requirements or qualification as a real estate investment trust (“REIT”) under the Code, and will elect to be taxed as a REIT under the Code beginning with its short taxable year ended December 31, 2019 upon the filing of its federal income tax return for such year. As a REIT, the Company generally will not be subject to federal income tax to the extent that it distributes its REIT taxable income for each tax year to its stockholders. REITs are subject to a number of organizational and operational requirements.

Pursuant to the Jumpstart Our Business Startups Act (the “JOBS Act”), the Company qualifies as an emerging growth company (“EGC”). An EGC may choose, as we have done, to take advantage of the extended private company transition period provided for complying with new or revised accounting standards that may be issued by the Financial Accounting Standards Board (“FASB”) or the Securities and Exchange Commission (the “SEC”).

5

POSTAL REALTY TRUST, INC.
NOTES TO CONSOLIDATED AND COMBINED CONSOLIDATED FINANCIAL STATEMENTS

UNAUDITED (CONTINUED)

Note 2. The Company’s IPO and Formation Transactions

Both the Company and the Operating Partnership commenced operations upon completion of the IPO and the Formation Transactions on May 17, 2019. The Company’s operations are carried out primarily through the Operating Partnership and the wholly owned subsidiaries of the Operating Partnership.

On May 17, 2019, the Company completed its IPO, pursuant to which it sold 4,500,000 shares of its Class A common stock at a public offering price of $17.00 per share. The Company raised $76.5 million in gross proceeds, resulting in net proceeds of approximately $71.1 million after deducting approximately $5.4 million in underwriting discounts and before giving effect to $6.4 million in other expenses relating to the IPO. The Company’s Class A common stock began trading on the New York Stock Exchange under the symbol “PSTL” on May 15, 2019.

In connection with the IPO and Formation Transactions, the Company, through its Operating Partnership, used a portion of the net proceeds to repay approximately $31.7 million of outstanding indebtedness related to the Predecessor.

Pursuant to the Formation Transactions, the Company, directly or through the Operating Partnership, acquired the entities that comprise the Predecessor. The initial properties and other interests were contributed in exchange for 1,333,112 OP Units, 637,058 shares of Class A common stock, 27,206 shares of Voting Equivalency stock and $1.9 million of cash. In addition, the Operating Partnership purchased 81 post office properties (the “Acquisition Properties”) in exchange for $26.9 million in cash, including approximately $1.0 million paid to Mr. Spodek, the Company’s chief executive officer and a director for his non-controlling ownership in nine of the Acquisition Properties.

Because of the timing of the IPO and the Formation Transactions, the Company’s results of operations for the three months ended March 31, 2019 reflect the results of operations of the Predecessor. The financial condition as of December 31, 2019 and March 31, 2020 and results of operations for the three months ended March 31, 2020 reflect solely the financial condition and operations of the Company. References in these notes to consolidated financial statements to “Postal Realty Trust, Inc.” signify the Company for the period after the completion of the IPO and the Formation Transactions and the Predecessor for all prior periods.  

6

POSTAL REALTY TRUST, INC.
NOTES TO CONSOLIDATED AND COMBINED CONSOLIDATED FINANCIAL STATEMENTS

UNAUDITED (CONTINUED)

Note 3. Summary of Significant Accounting Policies

Basis of Presentation

The accompanying unaudited Consolidated and Combined Consolidated Financial Statements include the financial position and results of operations of the Company and its Predecessor, the Operating Partnership and its wholly owned subsidiaries. The Company did not have any operations from the date of formation to May 17, 2019. The Predecessor represents a combination of certain entities holding interests in real estate that were commonly controlled prior to the Formation Transactions. Due to their common control, the financial statements of the separate Predecessor entities which owned the properties and the management company are presented on a combined consolidated basis. The effects of all significant intercompany balances and transactions have been eliminated.

The Company consolidates the Operating Partnership, a VIE in which the Company is considered the primary beneficiary. The primary beneficiary is the entity that has (i) the power to direct the activities that most significantly impact the entity’s economic performance and (ii) the obligation to absorb losses of the VIE or the right to receive benefits from the VIE that could be significant to the VIE.

A non-controlling interest is defined as the portion of the equity in an entity not attributable, directly or indirectly, to the Company. Non-controlling interests are required to be presented as a separate component of equity in the Consolidated Balance Sheets. Accordingly, the presentation of net income (loss) reflects the income attributed to controlling and non-controlling interests.

The accompanying consolidated and combined consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 8 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements.

This interim financial information should be read in conjunction with the consolidated and combined consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019. Management believes that all adjustments of a normal, recurring nature considered necessary for a fair presentation have been included. This interim financial information does not necessarily represent or indicate what the operating results will be for the year ending December 31, 2020. All material intercompany accounts and transactions have been eliminated.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities and the reported amounts of revenues and expenses during the reporting period. Although management believes its estimates are reasonable, actual results could differ from those estimates.

Cash and Escrows and Reserves

Cash included unrestricted cash with a maturity of three months or less. Escrows and reserves consisted of restricted cash. The following table provides a reconciliation of cash and escrows and reserves reported within the Company’s Consolidated Balance Sheets and Consolidated and Combined Consolidated Statements of Cash Flows:

	As of
	March 31, 2020		December 31, 2019
Cash	$	2,844,040	$	12,475,537
Escrows and reserves:
Maintenance reserve		664,165		663,339
ESPP reserve		27,601		44,727
Cash and escrows and reserves	$	3,535,806	$	13,183,603

7

POSTAL REALTY TRUST, INC.
NOTES TO CONSOLIDATED AND COMBINED CONSOLIDATED FINANCIAL STATEMENTS

UNAUDITED (CONTINUED)

Fair Value of Financial Instruments

The following disclosure of estimated fair value was determined by management using available market information and appropriate valuation methodologies. However, considerable judgment is necessary to interpret market data and develop estimated fair value. Accordingly, the estimates presented herein are not necessarily indicative of the amounts the Company could realize on disposition of the assets and liabilities as of March 31, 2020 and December 31, 2019. The use of different market assumptions and/or estimation methodologies may have a material effect on the estimated fair value amounts. Cash, escrows and reserves, receivables, prepaid expenses, accounts payable and accrued expenses are carried at amounts which reasonably approximate their fair values as of March 31, 2020 and December 31, 2019 due to their short maturities.

The fair value of the Company’s borrowings under its Credit Facility approximates carrying value. The fair value of the Company’s secured borrowings aggregated approximately $3.3 million and $3.2 million as compared to the principal balance of $3.2 million and $3.2 million as of March 31, 2020 and December 31, 2019, respectively. The fair value of the Company’s debt was categorized as a Level 3 basis (as provided by ASC 820, Fair Value Measurements and Disclosures). The fair value of these financial instruments was determined by using a discounted cash flow analysis based on the borrowing rates currently available to the Company for loans with similar terms and maturities. The fair value of the mortgage debt was determined by discounting the future contractual interest and principal payments by a market rate.   

Disclosure about fair value of assets and liabilities is based on pertinent information available to management as of March 31, 2020 and December 31, 2019. Although management is not aware of any factors that would significantly affect the fair value amounts, such amounts have not been comprehensively revalued for purposes of these financial statements since March 31, 2020 and current estimates of fair value may differ significantly from the amounts presented herein.

Impairment 

The carrying value of real estate investments and related intangible assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment exists when the carrying amount of an asset exceeds the aggregate projected future cash flows over the anticipated holding period on an undiscounted basis. An impairment loss is measured based on the excess of the asset’s carrying amount over its estimated fair value. Impairment analyses will be based on current plans, intended holding periods and available market information at the time the analyses are prepared. If estimates of the projected future cash flows, anticipated holding periods or market conditions change, the evaluation of impairment losses may be different and such differences may be material. The evaluation of anticipated cash flows is subjective and is based, in part, on assumptions regarding future occupancy, rental rates and capital requirements that could differ materially from actual results. No impairments were recorded during the three months ended March 31, 2020 and 2019. 

Concentration of Credit Risks 

As of March 31, 2020, the Company’s properties were leased to a single tenant, the USPS, other than a de minimis non-postal tenant that shares space in a building leased to the USPS. For the three months ended March 31, 2020, no state had a concentration of rental income over 10% as a percentage of total rental income. For the three months ended March 31, 2019, our total rental income of $1.5 million was concentrated in the following states: Texas (13.8%), Massachusetts (13.4%), Wisconsin (12.3%) and Ohio (10.4%). The ability of the USPS to honor the terms of their leases is dependent upon regulatory, economic, environmental or competitive conditions in any of these areas and could have an effect on our overall business results. 

The Company has deposited cash and maintains its bank deposits with large financial institutions in amounts that exceed federally insured limits. The Company has not experienced any losses in such accounts. 

Equity Based Compensation 

The Company accounts for equity-based compensation in accordance with ASC Topic 718 Compensation – Stock Compensation, which requires the Company to recognize an expense for the grant date fair value of equity-based awards. Equity-classified stock awards granted to employees and non-employees that have a service condition and/or a market condition are measured at fair value at date of grant and remeasured at fair value only upon a modification of the award. The Company will record forfeitures as they occur. 

The Company recognizes compensation expense on a straight-line basis over the requisite service period of each award, with the amount of compensation expense recognized at the end of a reporting period at least equal the portion of fair value of the respective award at grant date or modification date, as applicable, that has vested through that date. For awards with a market condition, compensation cost is not reversed if a market condition is not met so long as the requisite service has been rendered, as a market condition does not represent a vesting condition. 

See Note 11. Stockholder’s Equity for further details. 

Earnings per Share 

The Company calculates net loss per share based upon the weighted average shares outstanding less issued and outstanding non-vested shares of Class A common stock for the period beginning May 17, 2019. Diluted earnings per share is calculated after giving effect to all potential dilutive shares outstanding during the period. There were 2,827,737 potentially dilutive shares outstanding related to the issuance of OP Units and LTIP Units held by non-controlling interests as of March 31, 2020.

8

POSTAL REALTY TRUST, INC.
NOTES TO CONSOLIDATED AND COMBINED CONSOLIDATED FINANCIAL STATEMENTS

UNAUDITED (CONTINUED)

Future Application of Accounting Standards

In February 2016, the FASB issued ASU 2016-02, Leases; in July 2018, the FASB issued ASU 2018-10, Codification Improvements to Topic 842, Leases, and ASU 2018-11, Leases — Targeted Improvements; and in December 2018, the FASB issued ASU 2018-20, Narrow-Scope Improvements for Lessors. This group of ASUs is collectively referred to as Topic 842. Topic 842 supersedes the existing standards for lease accounting (Topic 840, Leases). Topic 842 will be effective for the Company on January 1, 2021 as a result of its classification as an emerging growth company.

The Company expects to elect the practical expedients provided by Topic 842, including: the package of practical expedients that allows an entity not to reassess upon adoption (i) whether an expired or existing contract contains a lease, (ii) whether a lease classification related to expired or existing lease arrangements, and (iii) whether costs incurred on expired or existing leases qualify as initial direct costs, and as a lessor, the practical expedient not to separate certain non-lease components, such as common area maintenance, from the lease component if the timing and pattern of transfer are the same for the non-lease component and associated lease component, and the lease component would be classified as an operating lease if accounted for separately.

Topic 842 requires lessees to record most leases on their balance sheet through a right-of-use (“ROU”) model, in which a lessee records an ROU asset and a lease liability on their balance sheet. Leases that are less than 12 months do not need to be accounted for under the ROU model. Lessees will account for leases as financing or operating leases, with the classification affecting the timing and pattern of expense recognition in the income statement. Lease expense will be recognized based on the effective interest method for leases accounted for as finance leases and on a straight-line basis over the term of the lease for leases accounted for as operating leases. As of March 31, 2020, the Company was the lessee under one office lease and one ground lease that would require accounting under the ROU model.

The accounting by a lessor under Topic 842 is largely unchanged from that of Topic 840. Under Topic 842, lessors will continue to account for leases as a sales-type, direct-financing, or operating. A lease will be treated as a sale if it is considered to transfer control of the underlying asset to the lessee. A lease will be classified as direct-financing if risks and rewards are conveyed without the transfer of control. Otherwise, the lease is treated as an operating lease. Topic 842 requires accounting for a transaction as a financing in a sale leaseback in certain circumstances, including when the seller-lessee is provided an option to purchase the property from the landlord at the tenant’s option. The Company expects that this provision could change the accounting for these types of leases in the future. Topic 842 also includes the concept of separating lease and non-lease components. Under Topic 842, non-lease components, such as common area maintenance, would be accounted for under Topic 606 and separated from the lease payments. However, the Company will elect the lessor practical expedient allowing the Company to not separate these components when certain conditions are met. Upon adoption of Topic 842, the Company expects to combine tenant reimbursements with rental income on its consolidated statements of operations.

In September 2016, the FASB issued ASU No. 2016-13, Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments and in November 2018 issued ASU No. 2018-19, Codification Improvements to Topic 326, Financial Instruments - Credit Losses. The guidance changes how entities will measure credit losses for most financial assets and certain other instruments that are not measured at fair value through net income. The guidance replaces the current ‘incurred loss’ model with an ‘expected loss’ approach. The Company will also be required to disclose information about how it developed the allowances, including changes in the factors that influenced the Company’s estimate of expected credit losses and the reasons for those changes. ASU No. 2018-19 excludes operating lease receivables from the scope of this guidance. This guidance will be effective for the Company on January 1, 2023 as a result of its classification as an emerging growth company. The Company is currently in the process of evaluating the impact the adoption of the guidance will have on its consolidated financial statements. 

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POSTAL REALTY TRUST, INC.
NOTES TO CONSOLIDATED AND COMBINED CONSOLIDATED FINANCIAL STATEMENTS

UNAUDITED (CONTINUED)

Note 4. Real Estate Acquisitions

The following tables summarizes the Company’s acquisitions for the three months ended March 31, 2020. The purchase prices including transaction costs were allocated to the separately identifiable tangible and intangible assets and liabilities based on their relative fair values at the date of allocation. The total purchase price including transaction costs was allocated as follows:

Three Months Ended	Number of Properties		Land		Building and Improvements		Tenant Improvements		In-place lease intangibles		Above- market leases		Below- market leases			Other (1)			Total (2)
March 31, 2020(3)(4)(5)		83	$	4,824,009	$	24,605,963	$	287,749	$	2,453,318	$	7,148	$	(1,618,115	)		(34,098	)	$	30,525,974

Explanatory Notes:

(1) Includes an intangible liability related to unfavorable operating leases on three properties that is included in “Accounts Payable, accrued expenses and other” on the Company’s Consolidated Balance Sheets.

(2) Includes acquisition costs of $0.3 million for the three months ended March 31, 2020.

(3) Includes the acquisition of a 21-building portfolio leased to the USPS. The contract purchase price for the portfolio was $13.8 million, exclusive of closing costs, and giving effect to 483,333 OP Units issued to the sellers at a value of $17.00 per unit. The closing price of the Company’s common stock on January 10, 2020 was $16.39; therefore, total consideration at closing, including closing costs, was approximately $13.6 million of which $7.9 million represented the non-cash consideration (the value of  the OP Units) issued to the sellers.

(4)	Includes the acquisition of a 42-building portfolio leased to the USPS. The aggregate purchase price of such portfolio was approximately $8.8 million, including closing costs, which was funded with borrowings under our Credit Facility.
(5)	Includes the acquisition of 20 postal properties in individual or smaller portfolio transactions for approximately  $8.1 million, including closing costs.

Note 5. Intangible Assets and Liabilities 

The following table summarizes our intangible assets and liabilities as a result of the application of acquisition accounting: 

As of	Gross Asset (Liability)			Accumulated (Amortization)/ Accretion			Net Carrying Amount
March 31, 2020:
In-place lease intangibles	$	16,241,342			(7,580,929	)		8,660,413
Above-market leases		47,768			(21,602	)		26,166
Below-market leases		(10,290,416	)		2,390,563			(7,899,853	)
December 31, 2019:
In-place lease intangibles	$	13,788,024		$	(6,472,157	)	$	7,315,867
Above-market leases		40,620			(18,496	)		22,124
Below-market leases		(8,672,301	)		2,071,182			(6,601,119	)

Amortization of in-place lease intangibles was $1.1 million and $0.2 million for the three months ended March 31, 2020 and 2019, respectively. This amortization is included in “Depreciation and amortization” on the Company’s Consolidated and Combined Consolidated Statements of Operations. 

Amortization of acquired above market leases was $3,106 and $2,370 for the three months ended March 31, 2020 and 2019, respectively, and is included in “Rental income” on the Company’s Consolidated and Combined Consolidated Statements of Operations. Amortization of acquired below market leases was $0.3 million and $0.1 million for the three months ended March 31, 2020 and 2019, respectively, and is included in “Rental income” on the Company’s Consolidated and Combined Consolidated Statements of Operations. 

Future amortization/accretion of these intangibles is below:

Year Ending December 31,	In-place lease intangibles		Above-market leases		Below-market leases
2020 – Remaining	$	2,803,283	$	9,449	$	(821,831	)
2021		2,813,392		6,695		(993,180	)
2022		1,449,153		5,813		(890,128	)
2023		835,026		3,139		(809,855	)
2024		385,573		1,070		(719,369	)
Thereafter		373,986		—		(3,665,490	)
Total		8,660,413		26,166		(7,899,853	)

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POSTAL REALTY TRUST, INC.
NOTES TO CONSOLIDATED AND COMBINED CONSOLIDATED FINANCIAL STATEMENTS

UNAUDITED (CONTINUED)

Note 6. Debt

The following table summarizes the Company’s indebtedness as of March 31, 2020 and December 31, 2019:

	Outstanding Balance as of March 31, 2020			Outstanding Balance as of December 31, 2019			Interest Rate at March 31, 2020			Maturity Date
Revolving Credit Facility(1)	$	68,000,000		$	54,000,000			LIBOR+170bps	(2)	September 2023
Vision Bank(3)		1,506,858			1,522,672			4.00	%	September 2036
First Oklahoma Bank(4)		374,582			378,005			4.50	%	December 2037
Vision Bank – 2018(5)		892,613			900,385			5.00	%	January 2038
Seller Financing(6)		445,000			445,000			6.00	%	January 2025
Total Principal		71,219,053			57,246,062
Unamortized deferred financing costs		(34,534	)		(35,058	)
Total Debt	$	71,184,519		$	57,211,004

Explanatory Notes:

(1) On September 27, 2019, the Company entered into a credit agreement (as amended, the “Credit Agreement”) with People’s United Bank, National Association, individually and as administrative agent, BMO Capital Markets Corp., as syndication agent, and certain other lenders. The Credit Agreement provides for revolving commitments in an aggregate principal amount of $100.0 million with an accordion feature (“the Accordion Feature”) that permits the Company to borrow up to an additional $100.0 million for an aggregate total of $200.0 million, subject to customary terms and conditions, and a maturity date of September 27, 2023. On January 30, 2020, the Company amended the Credit Agreement in order to exercise a portion of the Accordion Feature to increase the maximum amount available under the Credit Facility to $150.0 million, subject to the borrowing base properties identified therein remaining unencumbered and subject to an enforceable lease. On June 25, 2020, the Company further amended the Credit Agreement to revise, among other items, certain definitions and borrowing base calculations to increase available capacity, as well as the restrictive covenant pertaining to Consolidated Tangible Net Worth (as defined in such amendment).

The interest rates applicable to loans under the Credit Facility are, at our option, equal to either a base rate plus a margin ranging from 0.7% to 1.4% per annum or LIBOR plus a margin ranging from 1.7% to 2.4% per annum, each based on a consolidated leverage ratio. In addition, the Company will pay, for the period through and including the calendar quarter ended March 31, 2020, an unused facility fee on the revolving commitments under the Credit Facility of 0.75% per annum for the first $100 million and 0.25% per annum for the portion of revolving commitments exceeding $100.0 million, and for the period thereafter, an unused facility fee of 0.25% per annum for the aggregate unused revolving commitments, with both periods utilizing calculations of daily unused commitments under the Credit Facility.

During the three months ended March 31, 2020, the Company incurred $0.2 million of unused fees related to the Credit Facility. The Company’s ability to borrow under the Credit Facility is subject to ongoing compliance with a number of customary affirmative and negative covenants. As of March 31, 2020, the Company was in compliance with all of the Credit Facility’s debt covenants.

(2) As of March 31, 2020, the one-month LIBOR rate was 0.99%.

(3) Five properties are collateralized under this loan as of March 31, 2020 with Mr. Spodek as the guarantor. On September 8, 2021 and every five years thereafter, the interest rate will reset at a variable annual rate of Wall Street Journal Prime Rate (“Prime”) + 0.5%.

(4) The loan is collateralized by first mortgage liens on four properties and a personal guarantee of payment by Mr. Spodek. Interest rate resets on December 31, 2022 to Prime + 0.25%.

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NOTES TO CONSOLIDATED AND COMBINED CONSOLIDATED FINANCIAL STATEMENTS

UNAUDITED (CONTINUED)

(5) The loan is collateralized by first mortgage liens on one property and a personal guarantee of payment by Mr. Spodek. Interest rate resets on January 31, 2023 to Prime + 0.5%.

(6) In connection with the acquisition of a property, we obtained seller financing secured by the property in the amount of $0.4 million requiring five annual payments of principal and interest of $105,661 with the first installment due on January 2, 2021 based on a 6.0% interest rate per annum through January 2, 2025.

The scheduled principal repayments of indebtedness as of March 31, 2020 are as follows:

Year Ending December 31,	Amount
2020 – Remaining	$	82,151
2021		193,899
2022		205,580
2023		68,218,425
2024		229,234
Thereafter		2,289,764
Total	$	71,219,053

Note 7. Leases

As of March 31, 2020, all of the properties owned by the Company were occupied by a single tenant, the USPS, other than a de minimis non-postal tenant that shares space in a building leased to the USPS. Certain leases have expired and the balance expire at various dates through November 30, 2029.

Future minimum lease payments to be received as of March 31, 2020 under non-cancellable operating leases for the next five years and thereafter are as follows: ⁽¹⁾

Year Ending December 31,	Amount
2020 – Remaining(2)	$	9,531,480
2021		11,600,963
2022		8,553,461
2023		6,471,524
2024		4,329,108
Thereafter		5,248,174
Total	$	45,734,710

Explanatory Notes:

(1) The above minimum lease payments to be received do not include reimbursements from the USPS for real estate taxes.

(2) As of March 31, 2020, the leases at 31 of our properties had expired and the USPS was occupying such properties as a holdover tenant. In addition, the lease at one of our properties is a month to month lease.

During the three months ended March 31, 2020, the Company assumed an operating ground lease at one of our properties which includes rent escalations throughout the lease term (including renewal options) and expires on September 30, 2059. Ground lease expense is included in “Property Operating Expenses” on the Company’s Consolidated and Combined Consolidated Statements of Operations.

Year Ending December 31,	Amount
2020 – Remaining	$	16,805
2021		22,400
2022		22,400
2023		22,400
2024		22,960
Thereafter		1,159,690
Total	$	1,266,655

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POSTAL REALTY TRUST, INC.
NOTES TO CONSOLIDATED AND COMBINED CONSOLIDATED FINANCIAL STATEMENTS

UNAUDITED (CONTINUED)

Note 8. Income Taxes

Income tax expense related to UPH for the three months ended March 31, 2019 was $39,749 at an effective tax rate of 13.4%. The effective tax rate for the three months ended March 31, 2019 differs from the statutory rate of 21% due to certain entities included in the combined consolidated financial statements that are not subject to tax at the entity level, state taxes and interest and penalties from unrecognized tax benefits primarily related to the utilization of loss carryforwards.

In connection with the IPO, the Company and PRM jointly elected to treat PRM as a TRS. PRM performs management services, including for properties the Company does not own. PRM generates income, resulting in federal and state corporate income tax liability for PRM. For the three months ended March 31, 2020, income tax expense related to PRM was $10,197.

The Company has unrecognized tax benefits as of March 31, 2020 of $0.6 million which is inclusive of interest and penalties and a corresponding indemnification asset which is recorded in prepaid expenses and other assets on the consolidated balance sheet.

In connection with the IPO, the indirect sole shareholder of UPH agreed to reimburse the Company for unrecognized tax benefits primarily related to the utilization of certain loss carryforwards at UPH. The Company recorded an indemnification asset in the same amount as the unrecognized tax benefits. The indirect sole shareholder of UPH will be responsible for all tax related matters related to UPH.

On March 27, 2020, the President signed into law the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”). The CARES Act was enacted to provide economic relief to companies and individuals in response to the COVID-19 pandemic. Included in the CARES Act are tax provisions which increase allowable interest expense deductions for 2019 and 2020 and increase the ability for taxpayers to use net operating losses. While we do not expect these provisions to have a material impact on the Company’s taxable income or tax liabilities, we will continue to analyze the provisions of the CARES Act and related guidance as it is published.

​Note 9. Related Party Transactions

Management Fee Income

PRM recognized management fee income of $0.3 million for the three months ended March 31, 2020 and the Predecessor recognized management fee income of $0.3 million for the three months ended March 31, 2019 from various properties which were affiliated with Mr. Spodek. These amounts are included in “Fee and other income” on the Company’s Consolidated and Combined Consolidated Statements of Operations. Accrued management fees receivable of $0.1 million and $0.08 million as of March 31, 2020 and December 31, 2019, respectively, are included in “Rents and other receivables” on the Company’s Consolidated Balance Sheets.

Related Party Lease

On October 1, 2018, the Predecessor entered into a lease for office space in Cedarhurst, New York with an entity affiliated with the Predecessor (the “Office Lease”). Pursuant to the Office Lease, the monthly rent was $15,000 subject to escalations. The term of the Office Lease was five years commencing on October 1, 2018 (with rent commencing on January 1, 2019) and was set to expire on September 30, 2023. In connection with the IPO, the Office Lease was terminated. On May 17, 2019, the Company entered into a new lease for office space in Cedarhurst, New York with an entity affiliated with the Company’s CEO (the “New Lease”). Pursuant to the New Lease, the monthly rent is $15,000 subject to escalations. The term of the New Lease is five years commencing on May 17, 2019 and will expire on May 16, 2024. Rental expenses associated with the office lease for the three months ended March 31, 2020 was $47,782 and was recorded in “General and administrative expenses” on the Company’s Consolidated and Combined Consolidated Statements of Operations. As of March 31, 2020, $3,096 was outstanding and payable and is included in “Accounts payable, accrued expenses and other.”

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POSTAL REALTY TRUST, INC.
NOTES TO CONSOLIDATED AND COMBINED CONSOLIDATED FINANCIAL STATEMENTS

UNAUDITED (CONTINUED)

The following table represents the Company’s future rental payments related to the New Lease:

Year Ending December 31,	Amount
2020 – Remaining	$	138,367
2021		188,869
2022		194,535
2023		200,371
2024		76,244
Total	$	798,386

Guarantees

Mr. Spodek, our chief executive officer, has personally guaranteed our loans with First Oklahoma Bank and Vision Bank, totaling $2.8 million. As a guarantor, Mr. Spodek’s interests with respect to the debt he is guaranteeing (and the terms of any repayment or default) may not align with our interests and could result in a conflict of interest.

Note 10. Earnings Per Share

Earnings per share (“EPS”) is calculated by dividing net income (loss) attributable to common stockholders by the weighted average number of shares outstanding for the period. The following table presents a reconciliation of income (loss) from operations used in the basic and diluted EPS calculations.⁽¹⁾

	For the Three Months Ended March 31, 2020
Numerator for earnings per share – basic and diluted:
Net loss attributable to common stockholders	$	(677,755	)
Less: Income attributable to participating securities		(71,535	)
Numerator for earnings per share — basic and diluted	$	(749,290	)
Denominator for earnings per share – basic and diluted		5,174,569
Basic and diluted earnings per share	$	(0.14	)

Explanatory Note:

(1) The combined statements of operations prior to May 17, 2019 represents the activity of the Predecessor and EPS was not applicable.

Note 11. Stockholder’s Equity

The Company issued 4,500,000 shares of Class A common stock in conjunction with the IPO resulting in net proceeds of approximately $71.1 million after deducting approximately $5.4 million in underwriting discounts and before giving effect to $6.4 million in other expenses relating to the IPO. In addition, the Company issued 637,058 shares of Class A common stock and 27,206 shares of Voting Equivalency stock in connection with the Formation Transactions. Each outstanding share of Voting Equivalency stock entitles its holder to 50 votes on all matters on which Class A common stockholders are entitled to vote, including the election of directors, and holders of shares of Class A common stock and Voting Equivalency stock will vote together as a single class. Shares of Voting Equivalency stock are convertible into shares of Class A common stock, on a one-for-one basis, at the election of the holder at any time. Additionally, one share of Voting Equivalency stock will automatically convert into one share of Class A common stock for each 49 OP Units transferred (including by the exercise of redemption rights afforded with respect to OP Units) to a person other than a permitted transferee. This ratio is a function of the fact that each share of Voting Equivalency stock entitles its holder to 50 votes on all matters on which Class A common stockholders are entitled to vote and maintains the voting proportion of holders of Voting Equivalency stock with the holder’s economic interest in our Company.

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POSTAL REALTY TRUST, INC.
NOTES TO CONSOLIDATED AND COMBINED CONSOLIDATED FINANCIAL STATEMENTS

UNAUDITED (CONTINUED)

Dividends

During the three months ended March 31, 2020, the Board approved and the Company declared and paid dividends of $1.4 million to Class A common stockholders, Voting Equivalency stockholders, OP unitholders and LTIP unitholders, or $0.17 per share as shown in the table below.

Declaration Date	Record Date	Date Paid	Amount Per Share
January 30, 2020	February 14, 2020	February 28, 2020	$	0.17

Non-controlling Interests

Non-controlling interests in the Company represent OP Units held by the Predecessor’s prior investors and certain sellers of properties to the Company and LTIP Units primarily issued to the Company’s CEO in connection with the IPO and in lieu of cash compensation. The Company issued 483,333 OP Units in connection with a portfolio that the Company acquired, 53,230 LTIP Units to the Company’s CEO for his 2019 incentive bonus and 13,708 LTIP Units to the Company’s CEO during the three months ended March 31, 2020. As of March 31, 2020, and December 31, 2019, non-controlling interests consisted of 2,640,795 OP Units and 186,942 LTIP Units and 2,157,462 OP Units and 120,004 LTIP Units, respectively. This represented approximately 34.2% and 30.0% of the outstanding Operating Partnership units as of March 31, 2020 and December 31, 2019, respectively. Operating Partnership units and shares of common stock have essentially the same economic characteristics, as they share equally in the total net income or loss distributions of the Operating Partnership. Beginning on or after the date which is 12 months after the later of (i) the completion of the IPO or (ii) the date on which a person first became a holder of common units, each limited partner and assignees of limited partners will have the right, subject to the terms and conditions set forth in the partnership agreement to require the Operating Partnership to redeem all or a portion of the OP Units held by such limited partner or assignee in exchange for cash, or at the Company's sole discretion, in shares of the Company’s Class A common stock, on a one-for-one basis determined in accordance with and subject to adjustment under the partnership agreement.

The Operating Partnership unitholders are entitled to share in cash distributions from the Operating Partnership in proportion to their percentage ownership of OP Units.

Restricted Stock and Other Awards

Pursuant to the Company’s 2019 Equity Incentive Plan (the “Equity Incentive Plan” or the “Plan”), the Company may grant equity incentive awards to its directors, officers, employees and consultants. The maximum number of shares of Class A Common Stock that were authorized for issuance under the plan were 541,584. As of March 31, 2020, the remaining shares available under the Plan for future issuance was 40,237. The Plan provides for grants of stock options, stock awards, stock appreciation rights, performance units, incentive awards, other equity-based awards (including LTIP units) and dividend equivalents in connection with the grant of performance units and other equity-based awards.

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POSTAL REALTY TRUST, INC.
NOTES TO CONSOLIDATED AND COMBINED CONSOLIDATED FINANCIAL STATEMENTS

UNAUDITED (CONTINUED)

The following table presents a summary of restricted stock, LTIP Units and RSUs. The balance as of March 31, 2020 represents unvested shares of restricted stock and LTIP Units and RSUs that are outstanding, whether vested or not:

	Restricted Shares (1)(2)			LTIP Units (3)		Restricted Stock Units (“RSUs”) (4)		Total Shares			Weighted Average Grant Date Fair Value
Outstanding, at beginning of period		148,847			120,003		—		268,850		$	16.96
Granted		104,051			66,938		62,096		233,085		$	13.72
Converted to common stock		—			—		—		—			—
Vesting of restricted stock		—			—		—		—			—
Forfeited		(588	)		—		—		(588	)	$	17.00
Outstanding, at end of period		252,310			186,941		62,096		501,347		$	15.45

Explanatory Notes:

(1) Represents restricted shares awards included in common stock.

(2) The time-based restricted share awards granted to our officers and employees typically vest in three annual installments or cliff vest at the end of eight years. The time-based restricted share awards granted to our directors’ vest over one to three years.

(3) LTIP units to our officers and employees typically vest over three to eight years. During the quarter ended March 31, 2020, 2,843 LTIPs issued to an employee vested as a result of a modification of the award. In May 2020, pursuant to the Plan, the Company issued 27,365 LTIP Units to the Company’s CEO in lieu of his salary payable for the period from the one year anniversary of the IPO to December 31, 2020. LTIP Units issued to the Company’s CEO in lieu of cash compensation cliff vest on the eighth anniversary of the date of grant.

(4) Includes 38,672 RSUs granted to certain officers of the Company during the three months ended March 31, 2020 subject to the achievement of a service condition and a market condition. Such RSUs are market-based awards and are subject to the achievement of hurdles relating to the Company’s absolute total stockholder return and continued employment with the Company over the approximately three-year period from the grant date through December 31, 2022. The number of market-based RSUs is based on the number of shares issuable upon achievement of the market-based metric at target. Also, includes 13,253 time-based RSUs issued for 2019 incentive bonuses to certain employees that vested fully on February 14, 2020, the date of grant and 10,171 time-based RSUs granted to certain employees for their election to defer 2020 salary that vest on December 31, 2020. RSUs reflect the right to receive shares of Class A common stock, subject to the applicable vesting criteria.

During the three months ended March 31, 2020, the Company recognized compensation expense of $0.7 million related to all awards which is recorded in “General and administrative” on the Company’s Consolidated and Combined Consolidated Statements of Operations.

As of March 31, 2020, there was $6.1 million of total unrecognized compensation cost related to unvested awards, which is expected to be recognized over a weighted average period of 3.65 years.

Employee Stock Purchase Plan

In connection with the IPO, the Company established the Postal Realty Trust, Inc. 2019 Qualified Employee Stock Purchase Plan (“ESPP”), which allows the Company’s employees to purchase shares of the Company’s Class A common stock at a discount. A total of 100,000 shares of Class A common stock will be reserved for sale and authorized for issuance under the ESPP. The Code permits us to provide up to a 15% discount on the lesser of the fair market value of such shares of stock at the beginning of the offering period and the close of the offering period. As of March 31, 2020, 3,538 shares have been issued under the ESPP since commencement. During the three months ended March 31, 2020, the Company recognized compensation expense of $8,545 which is recorded in “General and administrative” on the Company’s Consolidated and Combined Consolidated Statements of Operations.

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POSTAL REALTY TRUST, INC.
NOTES TO CONSOLIDATED AND COMBINED CONSOLIDATED FINANCIAL STATEMENTS

UNAUDITED (CONTINUED)

Note 12. Commitments and Contingencies

As of March 31, 2020, the Company was not involved in any litigation nor to its knowledge is any litigation threatened against the Predecessor or the Company, as applicable, that, in management’s opinion, would result in any material adverse effect on the Company’s financial position, or which is not covered by insurance.

In the ordinary course of the Company’s business, the Company enters into non-binding (except with regard to exclusivity and confidentiality) letters of intent indicating a willingness to negotiate for acquisitions. There can be no assurance that definitive contracts will be entered into with respect to any matter covered by letters of intent, that the Company will close the transactions contemplated by such contracts on time, or that the Company will consummate any transaction contemplated by any definitive contract.

Note 13. Subsequent Events

Recently, the outbreak of a novel strain of coronavirus (COVID-19) has adversely impacted global economic activity and contributed to significant declines and volatility in financial markets. The COVID-19 pandemic and associated government responses are creating disruption in, and adversely impacting, many industries. The outbreak could have a continued material adverse impact on economic and market conditions and trigger a period of global economic slowdown. The rapid development and fluidity of this situation precludes any prediction as to the ultimate material adverse impact of COVID-19. Nevertheless, COVID-19 presents uncertainty and risk with respect to the Company and its tenant, which could adversely affect the Company and its financial performance. The Company received all of its April, May and June rents and payments due from holdover tenants and has not received any request for rent concessions as the date of this Quarterly Report. In addition, given the dislocation and government-imposed travel related limitations as a consequence of the pandemic, the Company’s ability to complete acquisitions in the near-term may be delayed.

On April 14, 2020, the Company borrowed an additional $6.0 million under the Credit Facility.

On April 27, 2020, the Board of Directors approved an amendment and restatement of the Alignment of Interest Program of the Company (as amended and restated, the “Alignment of Interest Program”), previously approved by the Board of Directors and in which the Company’s named executive officers and directors of the Company are eligible to participate. Among other amendments, the Alignment of Interest Program was amended to expand the class of participants eligible to be selected to participate in the Alignment of Interest Program by the Corporate Governance and Compensation Committee of the Board of Directors to include any Company employees or other individuals providing services to the Company or its affiliates, provided that they are eligible to participate in the Equity Incentive Plan.

On April 27, 2020, the Board of Directors amended the Equity Incentive Plan, subject to the approval of stockholders. Such amendment solely increases the total number of shares of Class A common stock that may be issued pursuant to awards granted under the Equity Incentive Plan from 541,584 shares to 1,291,584 shares. The remainder of the Equity Incentive Plan remains unchanged.

On April 30, 2020, the Company's Board of Directors approved and the Company declared a first quarter common stock dividend of $0.20 per share which was paid on May 29, 2020 to stockholders of record on May 11, 2020.

On April 30, 2020, the Company closed on the acquisition of a 13-building portfolio leased to the USPS in various states for approximately $7.1 million. In connection with the purchase, the Company obtained $4.5 million of mortgage financing, at a fixed interest rate of 4.25% with interest only for the first 18 months, which resets in November 2026 to the greater of Prime or 4.25%. The financing matures in April 2040. In addition, the Company purchased six postal properties in individual or smaller portfolio transactions for approximately $3.4 million.

In May 2020, the Company determined that it had overdrawn its Credit Facility by approximately $5.1 million. The Company satisfied such amount with a portion of the proceeds from the secured mortgage financing described below.

On May 15, 2020, the Company paid down $0.5 million on the Credit Facility.

On May 28, 2020, the Company completed the separation of deed and transfer of the real property attributable to a de minimis non-postal tenant that shares space in a building leased to the USPS. At the time of the IPO a property located in Milwaukee, WI, a portion of which is leased to the USPS, was contributed to the Company. It was intended that the non-postal portion of the property would revert back to an entity affiliated with Mr. Spodek once a separation of the deed was completed. The portion of the property leased to the USPS remains owned by a wholly owned subsidiary of the Operating Partnership. The independent members of our Board of Directors ratified the no consideration transfer.

On June 8, 2020, the Company obtained $9.2 million of mortgage financing at a fixed interest rate of 4.25% with interest only payable for the first 18 months, which resets in January 2027 to the greater of Prime or 4.25%. The financing matures in June 2040.

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POSTAL REALTY TRUST, INC.
NOTES TO CONSOLIDATED AND COMBINED CONSOLIDATED FINANCIAL STATEMENTS

UNAUDITED (CONTINUED)

On June 8, 2020, the Company paid down $6.0 million on the Credit Facility.

On June 25, 2020, the Company amended the Credit Agreement to revise, among other items, certain definitions and borrowing base calculations to increase available capacity, as well as the restrictive covenant pertaining to Consolidated Tangible Net Worth (as defined in such amendment).

As of June 25, 2020, the Company had entered into a definitive agreement to acquire one postal property leased to the USPS for approximately $1.7 million. Formal due diligence has been completed and the transaction is expected to close during the third quarter of 2020, subject to the satisfaction of customary closing conditions. 

Current Lease Renewal and Revised USPS Lease Form

As of June 25, 2020, the leases at 43 of our properties (consisting of 20 properties for which leases expired in 2019, including one lease that expired as of the date of our acquisition, and 23 properties for which leases expired in 2020) had expired and the USPS is occupying such properties as a holdover tenant, aggregating $1.9 million in annualized rental income. To date, the USPS has not vacated or notified us of its intention to vacate any of these 43 properties. The Company has received all holdover rent on a month to month basis, with the USPS paying the greater of market rent or the rent amount under the expired lease.

The USPS has adopted a revised form of our modified double-net lease, which transfers the responsibility for additional maintenance expenses and obligations to the landlord, including some components of plumbing and electrical systems. To date, we have not renewed or entered into revised leases for any of our leases with the USPS that expired in 2019 or 2020.

As of June 25, 2020, we have not entered into any definitive documentation with respect to any addendum to the revised form of our modified double-net lease, rental rates or leases for the 43 properties at which the USPS is a holdover tenant, and there can be no guarantee that any new leases that we enter into with the USPS will reflect our expectations with respect to terms or timing.

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis is based on, and should be read in conjunction with, the unaudited Consolidated and Combined Consolidated Financial Statements and the related notes thereto of Postal Realty Trust, Inc. contained in this Quarterly Report on Form 10-Q and our Annual Report on Form 10-K for the year ended December 31, 2019.

As used in this section, unless the context otherwise requires, references to “we,” “our,” “us,” and “our company” refer to Postal Realty Trust, Inc., a Maryland corporation, together with our consolidated subsidiaries, including Postal Realty LP, a Delaware limited partnership (“our Operating Partnership”), of which we are the sole general partner and which we refer to in this Quarterly Report as our Operating Partnership.

Prior to the closing of our initial public offering (our “IPO”) on May 17, 2019, Andrew Spodek, our chief executive officer and a member of our board of directors (the “Board”), directly or indirectly controlled 190 properties owned by the Predecessor that were contributed as part of the Formation Transactions (as defined below). Of these 190 properties, 140 were held indirectly by the Predecessor through a series of holding companies, which we refer to collectively as “UPH.” The remaining 50 properties were owned by Mr. Spodek through 12 limited liability companies and one limited partnership, which we refer to collectively as the “Spodek LLCs.” References to our “Predecessor” consist of UPH, the Spodek LLCs and Nationwide Postal Management, Inc., a property management company whose management business we acquired in the Formation Transactions (as defined below), collectively.

Forward-Looking Statements 

We make statements in this Quarterly Report that are forward-looking statements within the meaning of the federal securities laws. In particular, statements pertaining to our capital resources, property performance and results of operations contain forward-looking statements. Likewise, all of our statements regarding anticipated growth in our funds from operations and anticipated market conditions, demographics and results of operations are forward-looking statements. You can identify forward-looking statements by the use of forward-looking terminology such as “believes,” “expects,” “may,” “will,” “should,” “seeks,” “approximately,” “intends,” “plans,” “pro forma,” “estimates” or “anticipates” or the negative of these words and phrases or similar words or phrases which are predictions of or indicate future events or trends and which do not relate solely to historical matters. You can also identify forward-looking statements by discussions of strategy, plans or intentions.

Forward-looking statements involve numerous risks and uncertainties and you should not rely on them as predictions of future events. Forward-looking statements depend on assumptions, data or methods which may be incorrect or imprecise and we may not be able to realize them. We do not guarantee that the transactions and events described will happen as described (or that they will happen at all). The following factors, among others, could cause actual results and future events to differ materially from those set forth or contemplated in the forward-looking statements:

● change in the status of the USPS as an independent agency of the executive branch of the U.S. federal government;

● change in the demand for postal services delivered by the USPS;

● the solvency and financial health of the USPS;

● defaults on, early terminations of or non-renewal of leases by the USPS;

● the competitive market in which we operate;

● changes in the availability of acquisition opportunities;

● our inability to successfully complete real estate acquisitions or dispositions on the terms and timing we expect, or at all;

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● our failure to successfully operate developed and acquired properties;

● adverse economic or real estate developments, either nationally or in the markets in which our properties are located;

● decreased rental rates or increased vacancy rates;

● change in our business, financing or investment strategy or the markets in which we operate;

● fluctuations in mortgage rates and increased operating costs;

● changes in the method pursuant to which reference rates are determined and the phasing out of LIBOR after 2021;

● general economic conditions;

● financial market fluctuations;

● our failure to generate sufficient cash flows to service our outstanding indebtedness;

● our failure to obtain necessary outside financing on favorable terms or at all;

● failure to hedge effectively against interest rate changes;

● our reliance on key personnel whose continued service is not guaranteed;

● the outcome of claims and litigation involving or affecting us;

● changes in real estate, taxation, zoning laws and other legislation and government activity and changes to real property tax rates and the taxation of REITs in general;

● operations through joint ventures and reliance on or disputes with co-venturers;

● cybersecurity threats;

● environmental uncertainties and risks related to adverse weather conditions and natural disasters;

● governmental approvals, actions and initiatives, including the need for compliance with environmental requirements;

● lack or insufficient amounts of insurance;

● limitations imposed on our business in order to qualify and maintain our status as a REIT and our failure to qualify for or maintain such status; and

● public health threats such as COVID-19.

While forward-looking statements reflect our good faith beliefs, they are not guarantees of future performance. We disclaim any obligation to publicly update or revise any forward-looking statement to reflect changes in underlying assumptions or factors, of new information, data or methods, future events or other changes after the date of this Quarterly Report on Form 10-Q, except as required by applicable law. You should not place undue reliance on any forward-looking statements that are based on information currently available to us or the third parties making the forward-looking statements. For a further discussion of these and other factors that could impact our future results, performance or transactions, see Item 1A titled “Risk Factors” in this Quarterly Report and in our Annual Report on Form 10-K for the year ended December 31, 2019.

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Overview

Company

We were formed as a Maryland corporation on November 19, 2018 and commenced operations upon completion of our IPO on May 17, 2019 and the related formation transactions (the “Formation Transactions”). We conduct our business through a traditional UPREIT structure in which our properties are owned by our Operating Partnership directly or through limited partnerships, limited liability companies or other subsidiaries.

We will elect to be treated as a REIT under the Code beginning with our short taxable year ended December 31, 2019, upon the filing of our federal income tax return for such year. As long as we qualify and maintain our qualification as a REIT, we generally will not be subject to federal income tax to the extent that we distribute our taxable income for each tax year to our stockholders.

Initial Public Offering

On May 17, 2019, we completed our IPO, pursuant to which we sold 4,500,000 shares of our Class A common stock, par value $0.01 per share (our “Class A common stock”), at a public offering price of $17.00 per share. We raised $76.5 million in gross proceeds, resulting in net proceeds to us of approximately $71.1 million after deducting approximately $5.4 million in underwriting discounts and before giving effect to $6.4 million in other expenses relating to our IPO. Our Class A common stock began trading on the New York Stock Exchange (the “NYSE”) under the symbol “PSTL” on May 15, 2019. In connection with our IPO and the Formation Transactions, we also issued 1,333,112 OP Units, 637,058 shares of Class A common stock and 27,206 shares of Class B common stock, par value $0.01 per share (our “Class B common stock” or “Voting Equivalency stock”), to Mr. Spodek and his affiliates in exchange for the Predecessor properties and interests.

We are the sole general partner of our Operating Partnership through which our postal properties are directly or indirectly owned. As of March 31, 2020, we owned approximately 65.8% of the outstanding common units of limited partnership interest in the Operating Partnership (each, an “OP Unit,” and collectively, the “OP Units”) including long term incentive units of the Operating Partnership (each, an “LTIP Unit” and collectively, the “LTIP Units”). Our Board oversees our business and affairs.

Executive Overview

We are an internally managed REIT with a focus on acquiring and managing properties leased to the USPS. We believe the overall opportunity for consolidation that exists in the sector is very attractive. We continue to execute our strategy to acquire and consolidate postal properties that will generate strong earnings for our shareholders.

At the completion of our IPO and the Formation Transactions, we owned a portfolio of 271 postal properties located in 41 states comprising approximately of 872,000 net leasable interior square feet, all of which were leased to the USPS. As of March 31, 2020, our portfolio consisted of 549 owned postal properties, located in 45 states and comprising approximately 1.7 million net leasable interior square feet.

Q1 2020 Highlights

Acquisitions

● Closed on the acquisition of a 21-property portfolio leased to the USPS for approximately $13.6 million, which includes 483,333 OP Units.

● Closed on the acquisition of a 42-property portfolio leased to the USPS for approximately $8.8 million.

● Closed on the acquisition of 20 additional properties leased to the USPS in individual or smaller portfolio transactions for approximately $8.1 million.

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Debt

● We exercised a portion of the accordion feature on the Credit Facility to increase our permitted borrowing capacity up to $150.0 million and borrowed an additional $14.0 million under the Credit Facility, subject to the borrowing base properties identified therein remaining unencumbered and subject to an enforceable lease. Subject to certain conditions and borrowing base limitations, the total aggregate capacity under the Credit Facility is $200.0 million.

Equity

● Our Board of Directors approved and we declared a fourth quarter common stock dividend of $0.17 per share which was paid on February 28, 2020 to stockholders of record on February 14, 2020.

Emerging Growth Company

We are an “emerging growth company,” as defined in the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”) and we are eligible to take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not “emerging growth companies,” including not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act of 2002, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously approved.

In addition, the JOBS Act also provides that an “emerging growth company” can take advantage of the extended transition period provided in the Securities Act of 1933, as amended (the “Securities Act”), for complying with new or revised accounting standards. We have availed ourselves of these exemptions; although, subject to certain restrictions, we may elect to stop availing ourselves of these exemptions in the future even while we remain an “emerging growth company.”

We are also a “smaller reporting company” as defined in Regulation S-K under the Securities Act and have elected to take advantage of certain scaled disclosures available to smaller reporting companies. We may continue to be a smaller reporting company even after we are no longer an “emerging growth company.”

We will remain an “emerging growth company” until the earliest to occur of (i) the last day of the fiscal year during which our total annual revenue equals or exceeds $1.07 billion (subject to adjustment for inflation), (ii) December 31, 2024, (iii) the date on which we have, during the previous three-year period, issued more than $1.0 billion in non-convertible debt or (iv) the date on which we are deemed to be a “large accelerated filer” under the Exchange Act.

Factors That May Influence Future Results of Operations

COVID-19 Pandemic

Recently, the outbreak of a novel strain of coronavirus (COVID-19) has adversely impacted global economic activity and contributed to significant declines and volatility in financial markets. The COVID-19 pandemic and associated government responses are creating disruption in, and adversely impacting, many industries. The outbreak could have a continued material adverse impact on economic and market conditions and trigger a period of global economic slowdown. The rapid development and fluidity of this situation precludes any prediction as to the ultimate material adverse impact of COVID-19. Nevertheless, COVID-19 presents uncertainty and risk with respect to the Company’s tenant, which could adversely affect the Company and its financial performance. The Company received all of its April, May and June rents and payments due from holdover tenants and has not received any request for rent concessions as of the date of this Quarterly Report.

In addition, given the dislocation and government-imposed travel related limitations as a consequence of the pandemic, the Company’s ability to complete acquisitions in the near-term may be delayed. The Company has also been affected in that: (i) we have permitted certain employees to work from home, which slowed, for example, the Company’s routine quarterly close process; and (ii) we have been impacted by delays in communications with, and operations of, various counterparties. Although the effectiveness of our work from home practices have improved since implementation, the continued and future improvement of such practices, as well as communications with, and the operations of, various counterparties, is highly uncertain and cannot be predicted.

The USPS

We are dependent on the USPS’s financial and operational stability. The USPS is currently facing a variety of circumstances that are threatening its ability to fund its operations and other obligations as currently conducted without intervention by the federal government.

The USPS is constrained by laws and regulations that restrict revenue sources, mandate certain expenses and cap its borrowing capacity. As a result, the USPS is unable to fund its mandated expenses and continues to be subject to mandated payments to its retirement system and health benefits for current workers and retirees. The USPS has taken the position that productivity improvements and cost reduction measures alone without legislative and regulatory intervention will not be sufficient to maintain the ability to meet all of its existing obligations when due.

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Revenues

We derive revenues primarily from rent and tenant reimbursements under leases with the USPS for our properties, and fee and other income under the management agreements with respect to the postal properties owned by Mr. Spodek, his family members and their partners managed by PRM, our TRS. Rental income represents the lease revenue recognized under leases with the USPS. Tenant reimbursements represent payments made by the USPS under the leases to reimburse us for the majority of real estate taxes paid at each property. Fee and other income principally represent revenue PRM receives from postal properties owned by Mr. Spodek, his family members and their partners pursuant to the management agreements and typically is a percentage of the lease revenue for the managed property. As of March 31, 2020, all properties leased to the USPS had an average remaining lease term of 2.94 years. Factors that could affect our rental income, tenant reimbursement and fee and other income in the future include, but are not limited to: (i) our ability to renew or replace expiring leases and management agreements; (ii) local, regional or national economic conditions; (iii) an oversupply of, or a reduction in demand for, post office space; (iv) changes in market rental rates; (v) changes to the USPS’s current property leasing program or form of lease; and (vi) our ability to provide adequate services and maintenance at our properties and managed properties. 

Operating Expenses

We lease our properties to the USPS. The majority of our leases are modified double-net leases, whereby the USPS is responsible for utilities, routine maintenance and the reimbursement of property taxes and the landlord is responsible for insurance and roof and structure. Thus, an increase in costs related to the landlord’s responsibilities under these leases could negatively influence our operating results. Refer to “Current Lease Renewal and Revised USPS Lease Form” for further discussion.

Operating expenses generally consist of real estate taxes, property operating expenses, which consist of insurance, repairs and maintenance (other than those for which the tenant is responsible), property maintenance-related payroll and depreciation and amortization. Factors that may affect our ability to control these operating costs include but are not limited to: the cost of periodic repair, renovation costs, the cost of re-leasing space and the potential for liability under applicable laws. Recoveries from the tenant are recognized as revenue on an accrual basis over the periods in which the related expenditures are incurred. Tenant reimbursements and operating expenses are recognized on a gross basis, because (i) generally, we are the primary obligor with respect to the real estate taxes and (ii) we bear the credit risk in the event the tenant does not reimburse the real estate taxes.

The expenses of owning and operating a property are not necessarily reduced when circumstances, such as market factors and competition, cause a reduction in income from the property. If revenues drop, we may not be able to reduce our expenses accordingly. Costs associated with real estate investments generally will not be materially reduced even if a property is not fully occupied or other circumstances cause our revenues to decrease. As a result, if revenues decrease in the future, static operating costs may adversely affect our future cash flow and results of operations.

General and Administrative

General and administrative expenses include employee compensation costs (including equity-based compensation), professional fees, legal fees, insurance, consulting fees, portfolio servicing costs and other expenses related to corporate governance, filing reports with the United States Securities and Exchange Commission (the “SEC”) and the NYSE, and other compliance matters. Our Predecessor was privately owned and historically did not incur costs that we incur as a public company. In addition, while we expect that our general and administrative expenses will continue to rise as our portfolio grows, we expect that such expenses as a percentage of our revenues will decrease over time due to efficiencies and economies of scale.

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Depreciation and Amortization

Depreciation and amortization expense relate primarily to depreciation on properties and improvements and to amortization of certain lease intangibles.

Indebtedness and Interest Expense

Interest expense for our Predecessor related primarily to three mortgage loans payable and related party interest-only promissory notes, See Note 6. Debt for further details. As a result of the Formation Transactions, we assumed certain indebtedness of the Predecessor, a portion of which was repaid without penalty using a portion of the net proceeds from our IPO. On September 27, 2019, we entered into a credit agreement (as amended, the “Credit Agreement”) with People’s United Bank, National Association, individually and as administrative agent, BMO Capital Markets Corp., as syndication agent, and certain other lenders. The Credit Agreement provides for a senior revolving credit facility (the “Credit Facility”) with revolving commitments in an aggregate principal amount of $100.0 million and, subject to customary conditions, the option to increase the aggregate lending commitments under the agreement by up to $100.0 million (the “Accordion Feature”). On January 30, 2020, we amended the Credit Agreement in order to exercise a portion of the Accordion Feature to increase the maximum amount available under the Credit Facility to $150.0 million, subject to the borrowing base properties identified therein remaining unencumbered and subject to an enforceable lease. As of March 31, 2020, the leases at 31 of our properties had expired and the USPS was occupying such properties as a holdover tenant, thereby excluding such properties from being part of the borrowing base under our Credit Facility. On June 25, 2020, the Company further amended the Credit Agreement to revise, among other items, certain definitions and borrowing base calculations to increase available capacity, as well as the restrictive covenant pertaining to Consolidated Tangible Net Worth (as defined in such amendment). Refer to Item 5. Other Information of this Quarterly Report for a discussion of such amendment. We intend to use the Credit Facility for working capital purposes, which may include repayment of mortgage indebtedness, property acquisitions and other general corporate purposes. Consistent with the method adopted by our Predecessor, we amortize on a non-cash basis the deferred financing costs associated with its debt to interest expense using the straight-line method, which approximates the effective interest rate method over the terms of the related loans. Any changes to the debt structure, including debt financing associated with property acquisitions, could materially influence the operating results depending on the terms of any such indebtedness.

Income Tax Benefit (Expense)

As a REIT, we generally will not be subject to federal income tax on our net taxable income that we distribute currently to our stockholders. Under the Code, REITs are subject to numerous organizational and operational requirements, including a requirement that they distribute each year at least 90% of their REIT taxable income, determined without regard to the deduction for dividends paid and excluding any net capital gains. If we fail to qualify for taxation as a REIT in any taxable year and do not qualify for certain statutory relief provisions, our income for that year will be taxed at regular corporate rates, and we would be disqualified from taxation as a REIT for the four taxable years following the year during which we ceased to qualify as a REIT. Even if we qualify as a REIT for federal income tax purposes, we may still be subject to state and local taxes on our income and assets and to federal income and excise taxes on our undistributed income. Additionally, any income earned by PRM and any other TRS we form in the future, will be subject to federal, state and local corporate income tax.

Current Lease Renewal and Revised USPS Lease Form

As of June 25, 2020, the leases at 43 of our properties (consisting of 20 properties for which leases expired in 2019, including one lease that expired as the date of our acquisition, and 23 properties for which leases expired in 2020) had expired and the USPS is occupying such properties as a holdover tenant, aggregating approximately 163,000 interior square feet and $1.9 million in annualized rental income. To date, the USPS has not vacated or notified us of its intention to vacate any of these 43 properties. When a lease expires, the USPS becomes a holdover tenant on a month-to-month basis typically paying the greater of market rent or the rent amount under the expired lease. During this holdover period, all maintenance responsibilities shift back to the USPS while it continues to reimburse property taxes. As of June 25, 2020, monthly rent rates on 42 of 43 holdover properties are approximately 5.8% higher than the rent rate in effect at the time of expiration of the prior lease. The remaining holdover property was a below market lease where the rental rate increased significantly.

The USPS has adopted a revised form of our modified double-net lease, which transfers the responsibility for additional maintenance expenses and obligations to the landlord, including some components of plumbing and electrical systems. To date, we have not renewed or entered into revised leases for any of our leases with the USPS that expired in 2019 or 2020.

As of June 25, 2020, we believe we have tentatively agreed to preliminary terms with the USPS on an addendum to its revised form of lease, pursuant to which documentation requirements are streamlined and some of the new responsibilities placed on the landlord by the USPS’ revised form of our modified double-net lease would be mitigated. We also believe we have tentatively agreed to preliminary terms on rental rates for 19 of the 20 leases that expired in 2019 and 7 of the 23 leases that have expired in 2020. In addition, we believe that in connection with executing revised form of leases, we will receive a lump sum reimbursement from the USPS for increased rents from the date of expiration to the date of lease execution. We anticipate that we will execute new, revised-form leases with the addendum for the leases that expired in 2019 in the near-term. However, we have not entered into any definitive documentation with respect to this addendum, rental rates or leases for the 43 properties at which the USPS is a holdover tenant, and there can be no guarantee that any new leases that we enter into with the USPS will reflect our expectations with respect to terms or timing.

As we adopt the USPS’s revised form of our modified double-net lease going forward, we anticipate that our property operating expenses and initial leasing costs may increase; however, we believe that the net impact of these additional expenses may be generally offset by our ability to negotiate contractual rent increases in excess of such expenses, which, if successful, could result in minimal changes to our net income as we adopt this new form of lease as our legacy leases expire.

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Results of Operations

Comparison of the three months ended March 31, 2020 and March 31, 2019

	For the Three Months Ended March 31,									%
	2020			2019(1)			$ Change			Change
Revenues
Rental income	$	4,300,771		$	1,492,386		$	2,808,835			188.2	%
Tenant reimbursements		601,346			236,856			364,490			153.9	%
Fee and other income		295,519			286,926			8,593			3.0	%
Total revenues		5,197,636			2,016,168			3,181,468			157.8	%
Operating expenses
Real estate taxes		641,944			249,789			392,155			157.0	%
Property operating expenses		407,048			251,706			155,342			61.7	%
General and administrative		2,301,543			376,891			1,924,652			510.7	%
Depreciation and amortization		2,034,868			480,443			1,554,425			323.5	%
Total operating expenses		5,385,403			1,358,829			4,026,574			296.3	%
(Loss) income from operations		(187,767	)		657,339			(845,106	)		(128.6	)%
Interest expense, net
Contractual interest expense		(728,226	)		(358,467	)		(369,759	)		103.2	%
Write-off and amortization of deferred financing fees		(104,462	)		(3,181	)		(101,281	)		>3000	%
Interest income		826			1,134			(308	)		(27.2	)%
Total interest expense, net		(831,862	)		(360,514	)		(471,348	)		130.7	%
(Loss) income before income tax expense		(1,019,629	)		296,825			(1,316,454	)		(443.5	)%
Income tax expense		(10,197	)		(39,749	)		29,552			(74.3	)%
Net (loss) income	$	(1,029,826	)	$	257,076		$	(1,286,902	)		(500.6	)%

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Explanatory Note:

(1) Reflects the results of operations of the Predecessor for the three months ended March 31,2019.

Revenues

Total revenues increased by $3.2 million for the three months ended March 31, 2020 compared to the three months ended March 31, 2019. The increase in revenue is attributable to the properties that we acquired in connection with the Formation Transactions and the properties that we acquired since the completion of our IPO.

Rental income – Rental income increased by $2.8 million quarter over quarter and is made up of $0.2 million related to the properties purchased by our Predecessor and $2.6 million for the properties that we acquired in connection with the Formation Transactions and the properties that we acquired since the completion of our IPO.

Tenant reimbursements – Tenant reimbursements increased $0.4 million for the three months ended March 31, 2020 compared to the three months ended March 31, 2019, primarily due to the properties that we acquired in connection with the Formation Transactions and the properties that we acquired since the completion of our IPO.

Operating Expenses

Real estate taxes – Real estate taxes increased by $0.4 million for the three months ended March 31, 2020 compared to the three months ended March 31, 2019 as a result of the properties that we acquired in connection with the Formation Transactions and the properties that we acquired since the completion of our IPO.

Property operating expenses – Property operating expenses increased by $0.2 million to $0.4 million for the three months ended March 31, 2020 from $0.3 million for the three months ended March 31, 2019. Property management expenses are included within property operating expenses and increased by $76,685 to $241,536 for the three months ended March 31, 2020 from $164,851 for the three months ended March 31, 2019. The remainder of the increase of $0.2 million is related to repairs and maintenance and insurance for the 81 properties that were acquired as part of the Formation Transactions and the properties that we have acquired since our IPO.

General and administrative – General and administrative expenses increased by $1.9 million to $2.3 million for the three months ended March 31, 2020 from $0.4 million for the three months ended March 31, 2019, primarily due to higher professional fees and increased personnel and investor relations expenses as a result of being a public company. In addition, $0.3 million of the general and administrative expense is attributable to acquisition related expenses for the postal properties that were acquired. In addition, we had equity-based compensation expense of $0.7 million related to stock awards that were issued in connection with our IPO and in the first quarter of 2020. Our Predecessor did not have any equity-based compensation expense.

Depreciation and amortization – Depreciation and amortization expense increased by $1.6 million to $2.0 million for the three months ended March 31, 2020 from $0.5 million for the three months ended March 31, 2019 and is primarily related to the properties that we acquired as part of the Formation Transactions and the properties that were acquired since our IPO.

Income Tax Expense – Income tax expense decreased by $0.03 million to $0.01 million for the three months ended March 31, 2020 from $0.04 million for the three months ended March 31, 2019 and was primarily attributable to a higher taxable income related to UPH. This is offset by income tax expense of $0.01 million related to PRM for the three months ended March 31, 2020.

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Interest Expense

During the three months ended March 31, 2020, we incurred interest expense of $0.8 million compared to $0.4 million for the three months ended March 31, 2019. The increase in interest expense is primarily due to the Credit Facility we entered into during 2019, which has an outstanding balance of $68.0 million as of March 31, 2020.

Cash Flows

Comparison of the three months ended March 31, 2020 and the three months ended March 31, 2019

The Company had cash of $2.8 million as of March 31, 2020 compared to $0.4 million as of March 31, 2019.

Cash flow from operating activities – Net cash provided by operating activities increased by $0.9 million to $1.4 million for the three months ended March 31, 2020 compared to $0.5 million for the same period in 2019. The increase in net cash provided by operating activities was primarily due to an increase in rental income due to the properties that were acquired as part of our Formation Transactions and the properties since our IPO.

Cash flow to investing activities – Net cash used in investing activities increased by $22.5 million to $23.2 million for the three months ended March 31, 2020 compared to $0.7 million for the same period in 2019. The increase was primarily due to the acquisition of postal properties during the three months ended March 31, 2020.

Cash flow from financing activities – Net cash provided by financing activities increased by $11.9 million to $12.2 million for the three months ended March 31, 2020 compared to $0.3 million for the same period in 2019. This increase was primarily due to the $14.0 million we borrowed under the Credit Facility, offset by dividends that were paid during the three months ended March 31, 2020.

Non-GAAP Financial Measures

Funds From Operations (“FFO”) and Adjusted Funds From Operations (“AFFO”)

We calculate FFO in accordance with the current National Association of Real Estate Investment Trusts (“NAREIT”) definition. NAREIT currently defines FFO as follows: net income (loss) (computed in accordance with GAAP) excluding depreciation and amortization related to real estate, gains and losses from the sale of certain real estate assets, gains and losses from change in control, and impairment write-downs of certain real estate assets and investments in entities when the impairment is directly attributable to decreases in the value of depreciable real estate held by an entity. Other REITs may not define FFO in accordance with the NAREIT definition or may interpret the current NAREIT definition differently than we do and therefore our computation of FFO may not be comparable to such other REITs.

We calculate AFFO by starting with FFO and adjusting for recurring capital expenditures (defined as all capital expenditures that are recurring in nature, excluding capital improvements that are incurred in connection with the acquisition of a property or obtaining a lease or lease renewal) and acquisition related expenses (defined as acquisition-related expenses that are incurred for investment purposes and do not correlate with the ongoing operations of our existing portfolio, including due diligence costs for acquisitions not consummated and certain auditing and accounting fees incurred that were directly related to completed acquisitions or dispositions) that are not capitalized and then adding back non-cash items including: non-real estate depreciation, loss on extinguishment of debt, write-off and amortization of debt issuance costs, straight-line rent adjustments, fair value lease adjustments and non-cash components of compensation expense. AFFO is a non-GAAP financial measure and should not be viewed as an alternative to net income calculated in accordance with GAAP as a measurement of our operating performance. We believe that AFFO is widely-used by other REITs and is helpful to investors as a meaningful additional measure of our ability to make capital investments. Other REITs may not define AFFO in the same manner as we do and therefore our calculation of AFFO may not be comparable to such other REITs.

These metrics are non-GAAP financial measures and should not be viewed as an alternative measurement of our operating performance to net income. Management believes that accounting for real estate assets in accordance with GAAP implicitly assumes that the value of real estate’ assets diminishes predictably over time. Since real estate values have historically risen or fallen with market conditions, many industry investors and analysts have considered the presentation of operating results for real estate companies that use historical cost accounting to be insufficient by themselves. As a result, we believe that the additive use of FFO and AFFO, together with the required GAAP presentation, is widely-used by our competitors and other REITs and provides a more complete understanding of our performance and a more informed and appropriate basis on which to make investment decisions.

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The following table provides a reconciliation of net loss before allocation to non-controlling interests, the most comparable GAAP measure, to FFO and AFFO:

	For the Three Months Ended March 31, 2020
Net loss	$	(1,029,826	)
Depreciation and amortization of real estate assets		2,034,868
FFO	$	1,005,042
Recurring capital expenditures		(98,757	)
Acquisition related expenses		295,037
Amortization of debt issuance costs		104,462
Straight-line rent adjustments		(7,937	)
Amortization of above and below market leases		(316,275	)
Non-cash stock compensation expense		713,810
AFFO	$	1,695,382

Liquidity and Capital Resources

Analysis of Liquidity and Capital Resources

We had approximately $2.8 million of cash and $0.7 million of escrows and reserves as of March 31, 2020.

On September 27, 2019, we entered into the Credit Agreement with People’s United Bank, National Association, individually and as administrative agent, BMO Capital Markets Corp., as syndication agent, and certain other lenders. The Credit Agreement provides for the senior revolving Credit Facility with revolving commitments in an aggregate principal amount of a $100.0 million and a maturity date of September 27, 2023.

The Credit Agreement provides that, subject to customary conditions, including obtaining lender commitments and compliance with its financial maintenance covenants under the Credit Agreement, we may seek to increase the aggregate lending commitments under the Credit Agreement by up to $100.0 million, with such increase in total lending commitments to be allocated to increasing the revolving commitments. 

The interest rates applicable to loans under the Credit Facility are, at our option, equal to either a base rate plus a margin ranging from 0.7% to 1.4% per annum or LIBOR plus a margin ranging from 1.7% to 2.4% per annum, each based on a consolidated leverage ratio. In addition, we paid, for the period through and including the calendar quarter ending March 31, 2020, an unused facility fee on the revolving commitments under the Credit Facility of 0.75% per annum for the first $100.0 million and 0.25% per annum for the portion of revolving commitments exceeding $100.0 million, and will pay for the period thereafter, an unused facility fee of 0.25% per annum for the aggregate unused revolving commitments, with both periods utilizing calculations of daily unused commitments under the Credit Facility. We are permitted to prepay all or any portion of the loans under the Credit Facility prior to maturity without premium or penalty, subject to reimbursement of any LIBOR breakage costs of the lenders. 

On January 30, 2020, we amended the Credit Agreement in order to exercise a portion of the accordion feature on the Credit Facility to increase permitted borrowings by $50.0 million to $150.0 million, subject to the borrowing base properties identified therein remaining unencumbered and subject to an enforceable lease. As of March 31, 2020, we had $68.0 million outstanding under our Credit Facility. Also, as of March 31, 2020, the leases at 31 of our properties had expired and the USPS was occupying such properties as a holdover tenant, thereby excluding such properties from being part of the borrowing base under our Credit Facility. On June 25, 2020, the Company further amended the Credit Agreement to revise, among other items, certain definitions and borrowing base calculations to increase available capacity, as well as the restrictive covenant pertaining to Consolidated Tangible Net Worth (as defined in such amendment). Refer to Item 5. Other Information of this Quarterly Report for a discussion of such amendment. We intend to use our Credit Facility for working capital purposes, which may include repayment of indebtedness, property acquisitions and other general corporate purposes. 

Our Credit Facility is guaranteed, jointly and severally, by our Company and certain indirect subsidiaries of our Company (the “Subsidiary Guarantors”) and includes a pledge of equity interests in the Subsidiary Guarantors. The Credit Agreement contains customary covenants that, among other things, restrict, subject to certain exceptions, the ability to incur indebtedness, grant liens on assets, make certain types of investments, engage in acquisitions, mergers or consolidations, sell assets, enter into hedging transactions, enter into certain transactions with affiliates and make distributions. The Credit Agreement requires compliance with consolidated financial maintenance covenants to be tested quarterly, including a maximum consolidated secured indebtedness ratio, maximum consolidated leverage ratio, minimum consolidated fixed charge coverage ratio, minimum consolidated tangible net worth, maximum dividend payout ratio, maximum consolidated unsecured leverage ratio, and minimum debt service coverage ratio. The Credit Agreement also contains certain customary events of default, including the failure to make timely payments under our Credit Facility, any event or condition that makes other material indebtedness due prior to its scheduled maturity, the failure to satisfy certain covenants and specified events of bankruptcy and insolvency. 

Our short-term liquidity requirements primarily consist of operating expenses and other expenditures associated with our properties, distributions to our limited partners and distributions to our stockholders required to qualify for REIT status, capital expenditures and potentially acquisitions. We expect to meet our short-term liquidity requirements through net cash provided by operations, cash, borrowings under our Credit Facility and the potential issuance of securities. 

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Our long-term liquidity requirements primarily consist of funds necessary for the repayment of debt at maturity, property acquisitions and non-recurring capital improvements. We expect to meet our long-term liquidity requirements with net cash from operations, long-term indebtedness including our Credit Facility and mortgage financing, the issuance of equity and debt securities and proceeds from select sales of our properties. We also may fund property acquisitions and non-recurring capital improvements using our Credit Facility pending permanent property-level financing.

We believe we have access to multiple sources of capital to fund our long-term liquidity requirements, including the incurrence of additional debt and the issuance of additional equity securities. However, in the future, there may be a number of factors that could have a material and adverse effect on our ability to access these capital sources, including unfavorable conditions in the overall equity and credit markets, our degree of leverage, our unencumbered asset base, borrowing restrictions imposed by our lenders, general market conditions for REITs, our operating performance, liquidity and market perceptions about us. The success of our business strategy will depend, to a significant degree, on our ability to access these various capital sources. In addition, we continuously evaluate possible acquisitions of postal properties, which largely depend on, among other things, the market for owning and leasing postal properties and the terms on which the USPS will enter into new or renewed leases.

To maintain our qualification as a REIT, we must make distributions to our stockholders aggregating annually at least 90% of our REIT taxable income determined without regard to the deduction for dividends paid and excluding capital gains. As a result of this requirement, we cannot rely on retained earnings to fund our business needs to the same extent as other entities that are not REITs. If we do not have sufficient funds available to us from our operations to fund our business needs, we will need to find alternative ways to fund those needs. Such alternatives may include, among other things, divesting ourselves of properties (whether or not the sales price is optimal or otherwise meets our strategic long-term objectives), incurring indebtedness or issuing equity securities in public or private transactions, the availability and attractiveness of the terms of which cannot be assured.

Consolidated Indebtedness as of March 31, 2020

As of March 31, 2020, we had approximately $71.2 million of outstanding consolidated principal indebtedness. The following table sets forth information as of March 31, 2020 with respect to the outstanding indebtedness of the Company:

	Amount Outstanding as of March 31, 2020		Interest Rate at March 31, 2020			Maturity Date
Credit Facility(1)	$	68,000,000		LIBOR+170bps	(2)	September 2023
Vision Bank(3)		1,506,588		4.00	%	September 2036
First Oklahoma Bank(4)		374,582		4.50	%	December 2037
Vision Bank – 2018(5)		892,613		5.00	%	January 2038
Seller Financing (6)		445,000		6.00	%	January 2025
Total Principal	$	71,219,053

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Explanatory Notes:

(1) On September 27, 2019, we entered into our Credit Agreement, which provides for revolving commitments in an aggregate principal amount of a $100.0 million and an accordion feature that permits us to borrow up to $200.0 million, subject to customary conditions. During the three months ended March 31, 2020, we amended the Credit Agreement in order to exercise a portion our accordion feature to increase permitted borrowings to $150.0 million from $100.0 million, subject to the borrowing base properties identified therein remaining unencumbered and subject to an enforceable lease.  As of March 31, 2020, $150.0 million in aggregate principal amount under the Credit Facility was authorized and $68.0 million was drawn. Our ability to borrow under the Credit Facility is subject to ongoing compliance with a number of customary affirmative and negative covenants. As of March 31, 2020, we were in compliance with all of the Credit Facility’s debt covenants. On April 14, 2020, we borrowed an additional $6.0 million under the Credit Facility.  In May 2020, we determined that we had overdrawn our Credit Facility by approximately $5.1 million. We satisfied such amount with a portion of the proceeds from the secured mortgage financing described below. As of the date of this filing, $67.5 million is outstanding under the Credit Facility. On June 25, 2020, the Company further amended the Credit Agreement to revise, among other items, certain definitions and borrowing base calculations to increase available capacity, as well as the restrictive covenant pertaining to Consolidated Tangible Net Worth (as defined in such amendment). Refer to Item 5. Other Information of this Quarterly Report for a discussion of such amendment.

(2) As of March 31, 2020, the one-month LIBOR rate was 0.99%.

(3) Five properties are collateralized under this loan as of March 31, 2020 with Mr. Spodek as the guarantor.  On September 8, 2021 and every five years thereafter, the interest rate will reset at a variable annual rate of Wall Street Journal Prime Rate (“Prime”) + 0.5%.

(4) The loan is collateralized by first mortgage liens on four properties and a personal guarantee of payment by Mr. Spodek. Interest rate resets on December 31, 2022 to Prime + 0.25%.

(5) The loan is collateralized by first mortgage liens on one property and a personal guarantee of payment by Mr. Spodek. Interest rate resets on January 31, 2023 to Prime + 0.5%.

(6) In connection with the acquisition of a property, we obtained seller financing secured by the property in the amount $0.4 million requiring five annual payments of principal and interest of $105,661 with the first installment due on January 2, 2021 based on a 6.0% interest rate per annum through January 2, 2025.

Secured Borrowings as of March 31, 2020

As of March 31, 2020, we had approximately $3.2 million of secured borrowings outstanding, all of which was fixed rate debt with a weighted average interest rate of 4.61% per annum.

Historically, our Predecessor’s equity capital was principally provided by Mr. Spodek as the majority equity owner of the Predecessor entities and its debt capital was principally provided through first mortgage loans on the properties owned by the Predecessor and promissory notes payable to related parties. Following the completion of our IPO and the Formation Transactions, we repaid approximately $31.7 million of indebtedness of the Predecessor using a portion of the net proceeds from our IPO. Depending on our ability to borrow under our Credit Facility, we may pursue significant secured borrowings in the future; although, we have not entered into any preliminary or binding documentation with respect to any such additional secured borrowings and there is no guarantee that any lender will be willing to lend to us on the terms and timing that we expect, if at all.

Dividends

To qualify and maintain our qualification as a REIT, we are required to pay dividends to stockholders at least equal to 90% of our REIT taxable income determined without regard to the deduction for dividends paid and excluding net capital gains. During the three months ended March 31, 2020 we paid cash dividends of $0.17 per share. On April 30, 2020, our Board of Directors approved and we declared a first quarter common stock dividend of $0.20 per share which was paid on May 29, 2020 to stockholders of record on May 11, 2020.

Subsequent Real Estate Acquisitions and Related Financings

On April 30, 2020, we closed on the acquisition of a 13-building portfolio leased to the USPS in various states for approximately $7.1 million. In connection with the purchase, we obtained $4.5 million of mortgage financing at a fixed interest rate of 4.25%, with interest only for the first 18 months, which resets in November 2026 to the greater of Prime or 4.25%. The financing matures in April 2040. In addition, we purchased six postal properties in individual or smaller portfolio transactions for approximately $3.4 million.

On June 8, 2020, we obtained $9.2 million of mortgage financing at a fixed interest rate of 4.25% with interest only for the first 18 months, which resets in January 2027 to the greater of Prime or 4.25%. The financing matures in June 2040.

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Acquisition Pipeline

As of June 25, 2020, we had entered into a definitive agreement to acquire one additional postal property of approximately 9,000 square feet for a purchase price of approximately $1.7 million. Such transaction is anticipated to close during the third quarter subject to the satisfaction of customary closing conditions.

We continue to identify, and are in various stages of reviewing, additional postal properties for acquisition and believe there are strong opportunities to continue growing our pipeline. In addition, given the dislocation and government-imposed travel related limitations as a consequence of the COVID-19 pandemic, the Company’s ability to complete acquisitions in the near-term may be delayed.

Off-Balance Sheet Arrangements

As of March 31, 2020, we did not have any off-balance sheet arrangements.

Critical Accounting Policies and Estimates

Refer to the heading titled “Critical Accounting Policies and Estimates” in Company’s Annual Report on Form 10-K for the year ended December 31, 2019 for a discussion of our critical accounting policies and estimates of the Predecessor and the Company, as applicable.

New Accounting Pronouncements

For a discussion of our adoption of new accounting pronouncements, please see Note 3 of our Consolidated and Combined Consolidated Financial Statements included herein.

Inflation

Because most of our leases provide for fixed annual rental payments without annual rent escalations, our rental income is fixed while our property operating expenses are subject to inflationary increases. A majority of our leases provide for tenant reimbursement of real estate taxes and thus the tenant must reimburse us for real estate taxes. We believe that if inflation increases expenses over time, increases in lease renewal rates will materially offset such increase.

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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Market risk is the risk of loss from adverse changes in market prices and interest rates. Our future earnings, cash flows and fair values relevant to financial instruments are dependent upon prevailing market interest rates. Our primary market risk results from our indebtedness, which bears interest at both fixed and variable rates. Subject to maintaining our status as a REIT for federal income tax purposes, we may manage our market risk on variable rate debt through the use of derivative instruments such as interest cap agreements to, in effect, cap the interest rate on all or a portion of the debt for varying periods up to maturity. In the future, we may use interest rate swaps or other derivatives that fi x the rate on all or a portion of our variable rate debt for varying periods up to maturity. This in turn, reduces the risks of variability of cash flows created by variable rate debt and mitigates the risk of increases in interest rates. Our objective when undertaking such arrangements will be to reduce our floating rate exposure. However, we provide no assurance that our efforts to manage interest rate volatility will successfully mitigate the risks of such volatility in our portfolio and we do not intend to enter into hedging arrangements for speculative purposes. We may utilize swap arrangements in the future.

As of March 31, 2020, our total indebtedness was approximately $71.2 million, consisting of approximately $68.0 million of variable-rate debt and approximately $3.2 million of fixed rate debt. Assuming no increase in the amount of our outstanding variable-rate indebtedness, if the one-month LIBOR were to increase or decrease by 0.50%, our cash flows would decrease or increase by approximately $340,000 on an annualized basis.

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

We maintain disclosure controls and procedures (as such term is defined in Rule 13a-15(e) and 15d-15(e) under the Exchange Act of 1934, as amended (the “Exchange Act”)), that are designed to ensure that information required to be disclosed in our reports under the Exchange Act is processed, recorded, summarized and reported within the time periods specified in the rules and regulations of the SEC and that such information is accumulated and communicated to management, including our Chief Executive Officer (Principal Executive Officer) and President, Treasurer and Secretary (Principal Financial Officer), as appropriate, to allow for timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and management is required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures.

We have carried out an evaluation, under the supervision and with the participation of management, including our Principal Executive Officer and Principal Financial Officer, regarding the effectiveness of our disclosure controls and procedures as of the end of the period covered by this report. Based on the foregoing, our Principal Executive Officer and Principal Financial Officer have concluded, as of the end of the period covered by this report, that our disclosure controls and procedures were effective in ensuring that information required to be disclosed by us in reports filed or submitted under the Exchange Act (i) is processed, recorded, summarized and reported within the time periods specified in the SEC’s rules and forms and (ii) is accumulated and communicated to our management, including our Principal Executive Officer and our Principal Financial Officer, as appropriate to allow for timely decisions regarding required disclosure.

Changes in Internal Control over Financial Reporting

There was no change in our internal control over financial reporting that occurred during our most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

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PART II. OTHER INFORMATION

Item 1. Legal Proceedings

From time to time, we may in the future be party to various claims and routine litigation arising in the ordinary course of business. Our management does not believe that any such litigation will materially affect our financial position or operations.

Item 1A. Risk Factors

Except as set forth below, there have been no material changes from the risk factors disclosed in the section entitled “Risk Factors” of our Annual Report on Form 10-K for the year ended December 31, 2019.

The following risk factor is intended to supplement the risk factors previously disclosed.

We are required going forward to adopt and utilize the USPS’s revised form of our modified double-net lease, which transfers the responsibility for additional maintenance expenses and obligations to the landlord, including some components of plumbing and electrical systems, and compensate third-party brokers of the USPS.

The USPS has adopted a revised form of our modified double-net lease, which transfers the responsibility for additional maintenance expenses and obligations to the landlord, including some components of plumbing and electrical systems. To date, we have not renewed or entered into revised leases for any of our leases with the USPS that expired in 2019 or 2020. We are required going forward to adopt and utilize the USPS’s revised form of our modified double-net lease and pay commissions to third-party brokers of the USPS.

The potential effects and increased costs associated with adopting and utilizing the USPS’s revised form of our modified double-net lease and paying commissions to third-party brokers of the USPS may limit the number of attractive investment opportunities going forward and our financial condition, results of operations, cash flow and growth prospects could be materially adversely affected.

The following risk factor is intended to replace the risk factor previously titled, “Public health threats such as COVID-19 could have a material adverse effect on the demand for post office properties and USPS operations.”

The novel coronavirus (COVID-19) pandemic and measures being taken to prevent its spread, including government-imposed travel related limitations, could (i) negatively impact demand for USPS services and post office properties which would have a material adverse effect on our business, results of operations and financial condition and (ii) delay our ability to complete acquisitions in the near-term.

The ongoing novel coronavirus (COVID-19) pandemic and measures being taken to prevent its spread has resulted in a reduction in foot traffic in many public places, including post office properties. A continued reduction in the use of in-person services may reduce the demand for post office properties by the USPS and our results of operations could decline as a result. The ongoing novel coronavirus (COVID-19) pandemic has also caused a decline in mail volume, particularly in advertising conducted through the mail. Early estimates suggest that mail volume could decline by as much as 60% as compared to the previous year and by as much as 50% in the USPS’s second quarter of 2020, which runs from April through June. The USPS has predicted that it could lose as much as $23 billion in revenues over the next 18 months. Continued reduction or permanent changes to mail volume could reduce demand for postal properties and materially adversely affect our result of operations. Further, although the Coronavirus Aid, Relief, and Economic Security (CARES) Act, which was recently signed into law and remains subject to approval by the U.S. Treasury Department, includes a $10 billion loan to the USPS, there can be no assurances that this financing will be approved or sufficient to sustain USPS operations in light of current shortfalls resulting from reduced mail volumes. Additionally, the conditions precedent to receiving the $10 billion loan may include significant increases in fees charged by the USPS to companies such as Amazon, Inc. for package delivery services. Such increase may reduce demand for the USPS's package delivery services and materially adversely affect our results of operations. As of the date of this Quarterly Report, the USPS has not received any portion of the contemplated $10 billion loan.

In addition, the USPS is dependent on the efforts of its employees, many of whom come into contact with a large number of individuals on a daily basis. If USPS employees are unwilling or unable to report to work regularly because of the novel coronavirus (COVID-19) pandemic or USPS services are otherwise diminished as a result of governmental response to the pandemic, the demand for USPS services or the reputation of the USPS may suffer, leading to a reduced need for post office properties and adversely affecting our business and results of operations.

Furthermore, given the dislocation and government-imposed travel related limitations as a consequence of the pandemic, our ability to complete acquisitions in the near-term may be delayed. The Company has also been affected in that: (i) we have permitted certain employees to work from home, which slowed, for example, the Company’s routine quarterly close process; and (ii) we have been impacted by delays in communications with, and operations of, various counterparties. Although the effectiveness of our work from home practices have improved since implementation, the continued and future improvement of such practices, as well as communications with, and the operations of, various counterparties, is highly uncertain and cannot be predicted.

The following risk factor is intended to replace the risk factor previously titled, “As of December 31, 2019, 20 of our leases were either in holdover status or expired on December 31, 2019, and if we are unable to renew these leases on equivalent terms, we might experience lower rental income, net operating income, cash flows and funds available for distributions.”

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As of June 25, 2020, the leases at 43 of our properties had expired and the USPS is occupying such properties as a holdover tenant. If we are not successful in renewing these expired leases, we will likely experience reduced occupancy, rental income and net operating income, which could have a material adverse effect on our financial condition, results of operations and ability to make distributions to shareholders.

As of June 25, 2020, the leases at 43 of our properties (consisting of 20 properties for which leases expired in 2019, including one lease that expired as of the date of our acquisition, and 23 properties for which leases expired in 2020) had expired and the USPS is occupying such properties as a holdover tenant, aggregating approximately 163,000 interior square feet and $1.9 million in annualized rental income. When a lease expires, the USPS becomes a holdover tenant on a month to month basis, typically paying the greater of market rent or the rent amount under the expired lease. To date, the USPS has not vacated or notified us of its intention to vacate any of these 43 properties. As of June 25, 2020, monthly rent rates on 42 of 43 holdover properties are approximately 5.8% higher than the rent rate in effect at the time of expiration of the prior lease. The remaining holdover property was a below market lease where the rental rate increased significantly. Due to the fact that the USPS is occupying 43 of our properties as a holdover tenant, such properties are excluded from being part of the borrowing base under our Credit Facility.

As of June 25, 2020, we believe we have tentatively agreed to preliminary terms with the USPS on an addendum to its revised form of lease, pursuant to which documentation requirements are streamlined and some of the new responsibilities placed on the landlord by the USPS’ revised form of our modified double-net lease would be mitigated. We also believe we have tentatively agreed to preliminary terms on rental rates for 19 of the 20 leases that expired in 2019 and 7 of the 23 leases that have expired in 2020. We anticipate that we will execute new, revised-form leases with the addendum for the leases that expired in 2019 in the near-term. However, we have not entered into any definitive documentation with respect to this addendum, rental rates or leases for the 43 properties at which the USPS is a holdover tenant, and there can be no guarantee that any new leases that we enter into with the USPS will reflect our expectations with respect to terms or timing.

We might not be successful in renewing the leases that are in holdover status or that are expiring in 2020, or obtaining positive rent renewal spreads, or even renewing the leases on terms comparable to those of the expiring leases. If we are able to renew these expired leases, the lease terms may not be comparable to those of the previous leases. If we are not successful, we will likely experience reduced occupancy, rental income and net operating income, as well as diminished borrowing capacity which could have a material adverse effect on our financial condition, results of operations and ability to make distributions to shareholders.

The following risk factor is intended to replace the risk factor previously titled, “Our growth depends on external sources of capital that are outside of our control and may not be available to us on commercially reasonable terms or at all, which could limit our ability to, among other things, meet our capital and operating needs or make the cash distributions to our stockholders necessary to qualify and maintain our qualification as a REIT.”

Our growth depends on external sources of capital that are outside of our control and may not be available to us on commercially reasonable terms or at all, which could limit our ability to, among other things, meet our capital and operating needs or make the cash distributions to our stockholders necessary to qualify and maintain our qualification as a REIT.

Depending on our ability to borrow under our Credit Facility, we may pursue significantly more secured borrowings in the future, although we have not entered into any preliminary or binding documentation with respect to any such additional secured borrowings and there is no guaranty that any lender will be willing to lend to us on the terms and timing that we expect, if at all. In order to qualify and maintain our qualification as a REIT, we are required under the Code to, among other things, distribute annually at least 90% of our REIT taxable income, determined without regard to the dividends paid deduction and excluding any net capital gains. In addition, we will be subject to income tax at regular corporate rates to the extent that we distribute less than 100% of our REIT taxable income, including any net capital gains. Because of these distribution requirements, we may not be able to fund future capital needs, including any necessary capital expenditures, from operating cash flow. Consequently, we rely on third-party sources to fund our capital needs. We may not be able to obtain such financing on favorable terms or at all and any additional debt we incur will increase our leverage and likelihood of default. Our access to third-party sources of capital depends, in part, on:

● general market conditions;

● the market’s perception of our growth potential;

● our current debt levels;

● our current and expected future earnings;

● our cash flow and cash distributions; and

● the market price per share of our Class A common stock.

Historically, the capital markets have been subject to significant disruptions. If we cannot obtain capital from third-party sources, we may not be able to acquire or develop properties when strategic opportunities exist, meet the capital and operating needs of our existing properties, satisfy our debt service obligations or make the cash distributions to our stockholders necessary to qualify and maintain our qualification as a REIT.

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Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

We contributed the net proceeds of the IPO to our Operating Partnership in exchange for OP Units. Thereafter, there was no material change in our planned use of proceeds from our IPO as described in the final prospectus filed with the SEC on May 16, 2019. As of March 31, 2020, our Operating Partnership had fully used the net proceeds received from us as described below:

● approximately $29.0 million to acquire interests in our initial properties;

● approximately $31.7 million to repay mortgage debt secured by some of our initial properties;

● approximately $6.1 million for general corporate purposes, including payment of expenses associated with our Formation Transactions, future acquisitions, transfer taxes and potentially, paying distributions.

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

On June 25, 2020 (the “Amendment Effective Date”), Postal Realty LP, as the borrower (the “Borrower”), Postal Realty Trust, Inc. and certain subsidiaries, as guarantors, and People’s United Bank, National Association, as administrative agent (the “Administrative Agent”) for the benefit of the lenders (the “Lenders”) party to the Credit Agreement (as defined below) entered into that certain Second Amendment to Credit Agreement (the “Second Amendment”) to the Credit Agreement by and among the Borrower, the Administrative Agent, the Lenders and BMO Capital Markets Corp., as joint lead arranger, dated as of September 27, 2019, as amended by that certain First Amendment to Credit Agreement (the “First Amendment”), dated as of January 30, 2020 (as amended by the First Amendment and the Second Amendment, the “Credit Agreement”).

The Second Amendment provides for certain amendments effective as of the Amendment Effective Date and through the term of the Credit Agreement. The Borrower and Lender agreed to the items listed below. Capitalized terms used in the list below and not defined therein have the meanings ascribed to them in the Second Amendment, a copy of which is attached hereto as Exhibit 10.2 and incorporated herein by reference.

● The Borrowing Base is 60.0% of the Borrowing Base Portfolio Value;

● The Borrowing Base Portfolio Value and Consolidated Total Real Estate Value calculations utilize a purchase date cutoff of six (6) calendar months; and the Borrowing Base Portfolio Value calculation utilizes an alternate metric for properties purchased at a capitalization rate of 7.0% or less and six (6) calendar months prior to such calculation;

● To be classified as a Postal Lease, a Lease to the United States Postal Service does not require that the tenant pay all real estate taxes at the property; and

● Consolidated Tangible Net Worth may not be less than (i) as of the last day of each calendar quarter ending September 30, 2019 and December 31, 2019, $50,000,000, and (ii) as of the last day of the calendar quarter ending March 31, 2020, $75,000,000, and (iii) as of the last day of each calendar quarter thereafter, the sum of (x) $75,000,000 plus (y) seventy-five percent (75%) of the aggregate net proceeds received by any Borrower Group Entity in connection with any offering of Equity Interests in the REIT on or after June 25, 2020.

The foregoing description of the Second Amendment is qualified in its entirety by reference to the full text of the Second Amendment.

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Item 6. Exhibits

Exhibit	Exhibit Description
10.1	First Amendment to Credit Agreement, dated as of January 30, 2020, by and among Postal Realty LP, Postal Realty Trust, Inc., the subsidiary guarantors party thereto, certain lenders party thereto and People’s United Bank, National Association, as administrative agent.*
10.2	Second Amendment to Credit Agreement, dated as of June 25, 2020, by and among Postal Realty LP, Postal Realty Trust, Inc., the subsidiary guarantors party thereto and People’s United Bank, National Association, as administrative agent.*
10.3	Postal Realty Trust, Inc. Amended and Restated Alignment of Interest Program, effective as of April 27, 2020 (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed on April 29, 2020).†
31.1	Certification of Chief Executive Officer furnished pursuant to Section 302 of the Sarbanes Oxley Act of 2002.*
31.2	Certification of President, Treasurer and Secretary furnished pursuant to Section 302 of the Sarbanes Oxley Act of 2002.*
32.1	Certification of Chief Executive Officer furnished pursuant to Section 906 of the Sarbanes Oxley Act of 2002.*
32.2	Certification of President, Treasurer and Secretary furnished pursuant to Section 906 of the Sarbanes Oxley Act of 2002.*
101.INS	INSTANCE DOCUMENT**
101.SCH	SCHEMA DOCUMENT**
101.CAL	CALCULATION LINKBASE DOCUMENT**
101.LAB	LABELS LINKBASE DOCUMENT**
101.PRE	PRESENTATION LINKBASE DOCUMENT**
101.DEF	DEFINITION LINKBASE DOCUMENT**

* Exhibits filed with this report.

† Compensatory plan or arrangement.

** Submitted electronically herewith. Attached as Exhibit 101 to this report are the following documents formatted in XBRL (eXtensible Business Reporting Language): (i) Consolidated Balance Sheets as of March 31, 2020 (Unaudited) and December 31, 2019; (ii) Consolidated and Combined Consolidated Statements of Operations (Unaudited); (iii) Consolidated and Combined Consolidated Statements of Equity (Unaudited); (iv) Consolidated and Combined Consolidated Statements of Cash Flows (Unaudited); and (v) Notes to Consolidated and Combined Consolidated Financial Statements (Unaudited).

36

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	POSTAL REALTY TRUST, INC.
Date: June 26, 2020	By:	/s/ Andrew Spodek
		Andrew Spodek
		Chief Executive Officer
		(Principal Executive Officer)
Date: June 26, 2020	By:	/s/ Jeremy Garber
		Jeremy Garber
		President, Treasurer and Secretary
		(Principal Financial Officer)

37

EX-10.1

Exhibit 10.1

FIRST AMENDMENT TO CREDIT AGREEMENT

FIRST AMENDMENT TO CREDIT AGREEMENT (this “Agreement”) dated as of January 30, 2020, among Postal Realty LP, a Delaware limited partnership (“Borrower”), POSTAL REALTY TRUST INC., a Maryland corporation (the “REIT”), the SUBSIDIARY GUARANTORS party hereto (the “Subsidiary Guarantors”; the REIT and each of the Subsidiary Guarantors, individually, a “Guarantor Party” and, collectively, the “Guarantor Parties”), the ELECTING LENDERS (defined below), the other LENDERS (defined below) party hereto, and PEOPLE’S UNITED BANK, NATIONAL ASSOCIATION, as administrative agent for the Lenders (together with its successors and assigns in such capacity, the “Administrative Agent”).

RECITALS:

A. Borrower, the Administrative Agent and certain lenders (together with their respective successors and assigns and the Electing Lenders, the “Lenders”) and BMO Capital Markets Corp., as Joint Lead Arranger, are parties to that certain Credit Agreement dated as of September 27, 2019, (the “Credit Agreement”). Except as otherwise herein expressly provided, each initially capitalized term used herein has the meaning assigned to such term in the Credit Agreement, as amended by this Agreement.

B. Pursuant to Section 2.21 of the Credit Agreement, Borrower has requested an increase in the Commitments by $50,000,000, and People’s United Bank, National Association, BMO Harris Bank N.A., Stifel Bank & Trust and The Bryn Mawr Trust Company (each an “Electing Lender” and collectively, the “Electing Lenders”) have agreed to provide such increase.

C. The parties hereto desire to amend the Credit Agreement as set forth herein.

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto agree as follows:

Section 1. Amendments of Credit Agreement. Effective as of the Effective Date (defined below), the Credit Agreement is hereby amended as follows:

(a) All references to the term “Syndication Agent” in the Credit Agreement or any of the other Loan Documents are hereby deleted in their entirety and replaced with the term “Joint Lead Arranger.”

(b) Schedule 2.01 of the Credit Agreement is hereby deleted in its entirety and replaced with Schedule 2.01 attached hereto.

Section 2. Commitments. Effective as of the Effective Date, The Bryn Mawr Trust Company shall be a Lender and the Commitments of the Lenders shall be as set forth on Schedule 2.01 attached hereto.

Section 3. Effective Date. The “Effective Date” shall be the date on which all of the following have been satisfied:

(a) the Administrative Agent shall have received the Lenders’, Borrower’s, the REIT’s, and the Subsidiary Guarantors’ signed counterparts of this Agreement;

(b) each Electing Lender shall have received a Note executed by Borrower in the principal amount equal to such Electing Lender’s Commitment as set forth on Schedule 2.01 attached hereto; and

(c) the Administrative Agent shall have been paid all of its reasonable and documented out-of-pocket expenses in connection with this Agreement.

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Section 4. Borrower’s Representations. Borrower hereby represents and warrants to the Administrative Agent and the Lenders, as follows:

(a) each of the representations and warranties of Borrower contained or incorporated in the Credit Agreement, as amended by this Agreement, or any of the other Loan Documents to which it is a party, are true and correct in all material respects on and as of the date hereof (except if any such representation or warranty is expressly stated to have been made as of a specific date, then as of such specific date);

(b) as of the date hereof and immediately after giving effect to this Agreement, no Default and no Event of Default has occurred and is continuing;

(c) Borrower has all necessary limited partnership power and authority to execute, deliver and perform its obligations under this Agreement; Borrower has been duly authorized by all necessary limited partnership action on its part; and this Agreement has been duly and validly executed and delivered by Borrower and constitutes Borrower’s legal, valid and binding obligation, enforceable in accordance with its terms, except as such enforceability may be limited by (i) bankruptcy, insolvency, reorganization, moratorium or similar laws of general applicability affecting the enforcement of creditors’ rights and (ii) the application of general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law); and

(d) Borrower’s execution and delivery of this Agreement (i) does not require any consent or approval of, registration or filing with, or any other action by, any governmental authority, except for such as have been obtained or made and are in full force and effect, (ii) will not violate any applicable law or regulation or the charter, by-laws or other organizational documents of Borrower or any order of any governmental authority and (iii) will not violate or result in a default under any material indenture, agreement or other material instrument binding upon Borrower or any of its assets.

Section 5. Guarantor Parties’ Representations. Each Guarantor Party hereby represents and warrants to the Administrative Agent and the Lenders, as follows:

(a) each of the representations and warranties of such Guarantor Party contained or incorporated in the Guaranty or any of the other Loan Documents to which it is a party, are true and correct in all material respects on and as of the date hereof (except if any such representation or warranty is expressly stated to have been made as of a specific date, then as of such specific date);

(b) as of the date hereof and immediately after giving effect to this Agreement, such Guarantor Party is in compliance with its obligations under the Guaranty and each of the other Loan Documents to which it is a party;

(c) such Guarantor Party has all necessary corporate or limited liability company, as applicable, power and authority to execute, deliver and perform its obligations under this Agreement; such Guarantor Party has been duly authorized by all necessary corporate or limited liability company, as applicable, action on its part; and this Agreement has been duly and validly executed and delivered by such Guarantor Party and constitutes such Guarantor Party’s legal, valid and binding obligation, enforceable in accordance with its terms, except as such enforceability may be limited by (i) bankruptcy, insolvency, reorganization, moratorium or similar laws of general applicability affecting the enforcement of creditors’ rights and (ii) the application of general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law); and

(d) such Guarantor Party’s execution and delivery of this Agreement (i) does not require any consent or approval of, registration or filing with, or any other action by, any governmental authority, except for such as have been obtained or made and are in full force and effect, (ii) will not violate any applicable law or regulation or the charter, by-laws or other organizational documents of such Guarantor Party or any order of any governmental authority and (iii) will not violate or result in a default under any material indenture, agreement or other material instrument binding upon such Guarantor Party or any of its assets.

Section 6. Ratification.

(a) Borrower hereby (i) reaffirms, ratifies, confirms, and acknowledges its obligations under the Credit Agreement (as amended hereby) and the other Loan Documents to which it is a party and agrees to continue to be bound thereby and perform thereunder and (ii) agrees and acknowledges that the Credit Agreement (as amended hereby) and the other Loan Documents and all of Borrower’s obligations thereunder are and remain in full force and effect and, except as expressly provided herein, have not been affected, modified or amended.

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(b) Each Guarantor Party hereby (i) reaffirms, ratifies, confirms, and acknowledges its obligations under the Guaranty and the other Loan Documents to which it is a party (after giving effect to this Agreement) and agrees to continue to be bound thereby and perform thereunder and (ii) agrees and acknowledges that the Guaranty and the other Loan Documents (after giving effect to this Agreement) and all of its obligations thereunder are and remain in full force and effect and, except as expressly provided herein, have not been affected, modified or amended.

Section 7. Miscellaneous.

(a) GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.

(b) Amendments, Etc. The terms of this Agreement may be waived, modified and amended only by an instrument in writing duly executed by the party hereto against whom enforcement of such waiver, modification or amendment is sought (provided that, subject to the terms of the Credit Agreement, the Administrative Agent may execute any such waiver, modification or amendment on behalf of the Lenders). Any such waiver, modification or amendment shall be binding upon Borrower, the Guarantors, the Electing Lenders, the Administrative Agent and the Lenders.

(c) Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the respective successors and assigns of Borrower, the Guarantors, the Electing Lenders, the Administrative Agent and the Lenders.

(d) Captions. The captions and section headings appearing herein are included solely for convenience of reference and are not intended to affect the interpretation of any provision of this Agreement.

(e) Counterparts. This Agreement may be executed in any number of counterparts, all of which taken together shall constitute one and the same instrument and any of the parties hereto may execute this Agreement by signing any such counterpart. Delivery of an executed counterpart of this Agreement by facsimile or email transmission shall be effective as manual delivery of an executed counterpart hereof.

(f) Severability. Any provision hereof which is held to be invalid, illegal or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such invalidity, illegality or unenforceability without affecting the validity, legality and enforceability of the remaining provisions hereof, and the invalidity of a particular provision in a particular jurisdiction shall not invalidate such provision in any other jurisdiction.

[remainder of page intentionally left blank]

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed and delivered as of the day and year first above written.

BORROWER:
POSTAL REALTY LP,
a Delaware limited partnership
By:	Postal Realty Trust, Inc.,
	Its general partner
	By:	/s/ Jeremy Garber
	Name:	Jeremy Garber
	Title:	President, Treasurer and Secretary

REIT:
POSTAL REALTY TRUST INC., a Maryland corporation
By:	/s/ Jeremy Garber
	Name:	Jeremy Garber
	Title:	President

[signatures continue on following pages]

SUBSIDIARY GUARANTORS:
A AND J ASSETS LLC
Alabama Postal Holdings, LLC
ARKANSAS POSTAL HOLDINGS LLC
ASSET 20024, L.L.C.
EASTERN POSTAL REALTY HOLDINGS, LLC
GARY GLEN PARK REALTY, LLC
GEORGIA POSTAL REALTY HOLDINGS LLC
Harbor Station, LLC
HILER BUFFALO LLC
Illinois Postal Holdings, LLC
INDIANA POSTAL REALTY HOLDINGS LLC
Iowa Postal Holdings, LLC
LOUISIANA POSTAL HOLDINGS LLC
Mass Postal Holdings LLC
Michigan Postal Holdings LLC
MIDWESTERN POSTAL REALTY HOLDINGS, LLC
Missouri & Minnesota Postal Holdings, LLC
NEW MEXICO POSTAL REALTY HOLDINGS LLC
Ohio Postal Holdings, LLC
Pennsylvania Postal Holdings, LLC
Postal Holdings LLC
PPP ASSETS, LLC
SOUTH CAROLINA POSTAL HOLDINGS LLC
SOUTHERN POSTAL REALTY HOLDINGS, LLC
Tennessee Postal Holdings, LLC
UNITED POST OFFICE INVESTMENTS, LLC
UPH MERGER SUB LLC
WESTERN POSTAL REALTY HOLDINGS, LLC
Wisconsin Postal Holdings, LLC
By:	/s/ Andrew Spodek
	Name: Andrew Spodek
	Title: Chief Executive Officer

[signatures continue on following pages]

ADMINISTRATIVE AGENT, LENDER AND ELECTING LENDER:
PEOPLE’S UNITED BANK, NATIONAL ASSOCIATION
By:	/s/ Jason Bishop
	Name:	Jason Bishop
	Title:	Senior Vice President

[signatures continue on following pages]

LENDER AND ELECTING LENDER:
BMO HARRIS BANK N.A.
By:	/s/ Lloyd Baron
	Name:	Lloyd Baron
	Title:	Director

[signatures continue on following pages]

LENDER AND ELECTING LENDER:
STIFEL BANK & TRUST
By:	/s/ Joe Sooter
	Name:	Joe Sooter
	Title:	Senior Vice President

LENDER AND ELECTING LENDER:
The Bryn Mawr Trust Company
By:	/s/ Noel Collins
	Name:	Noel Collins
	Title:	Senior Vice President

[signatures continue on following pages]

LENDER:
TriState Capital Bank
By:	/s/ Ellen Frank
	Name:	Ellen Frank
	Title:	Senior Vice President

[end of signatures]

SCHEDULE 2.01 – COMMITMENTS

Lender	Commitment
People’s United Bank, National Association	$	50,000,000.00
BMO Harris Bank N.A.	$	50,000,000.00
Stifel Bank & Trust	$	20,000,000.00
The Bryn Mawr Trust Company	$	20,000,000.00
TriState Capital Bank	$	10,000,000.00
Total Commitments	$	150,000,000.00

EX-10.2

Exhibit 10.2

Execution Version

SECOND AMENDMENT TO CREDIT AGREEMENT

SECOND AMENDMENT TO CREDIT AGREEMENT (this “Agreement”) dated as of June 25, 2020, among Postal Realty LP, a Delaware limited partnership (“Borrower”), POSTAL REALTY TRUST INC., a Maryland corporation (the “REIT”), the SUBSIDIARY GUARANTORS party hereto (the “Subsidiary Guarantors”; the REIT and each of the Subsidiary Guarantors, individually, a “Guarantor Party” and, collectively, the “Guarantor Parties”), and PEOPLE’S UNITED BANK, NATIONAL ASSOCIATION, as administrative agent for the Lenders (defined below) (together with its successors and assigns in such capacity, the “Administrative Agent”).

RECITALS:

A. Borrower, the Administrative Agent, certain lenders (together with their respective successors and assigns, the “Lenders”), and BMO Capital Markets Corp., as Joint Lead Arranger, are parties to that certain Credit Agreement dated as of September 27, 2019, as amended by that certain First Amendment to Credit Agreement dated as of January 30, 2020 (as amended, the “Credit Agreement”). Except as otherwise herein expressly provided, each initially capitalized term used herein has the meaning assigned to such term in the Credit Agreement, as amended by this Agreement.

B. Borrower, the Guarantor Parties and the Administrative Agent (on behalf of the Lenders) desire to amend the Credit Agreement as set forth herein.

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, Borrower, the Guarantor Parties and the Administrative Agent (on behalf of the Lenders) agree as follows:

Section 1. Amendments of Credit Agreement. Effective as of the date hereof, the Credit Agreement is hereby amended as follows:

(a) The term “Borrowing Base” in Section 1.01 of the Credit Agreement is hereby amended as follows (with the amendments identified in underlined, italicized font):

““Borrowing Base” means, as of any date of determination, an amount equal to fifty sixty percent (50%) (60%) of the Borrowing Base Portfolio Value.”

(b) The term “Borrowing Base Portfolio Value” in Section 1.01 of the Credit Agreement is hereby amended as follows (with the amendments identified in underlined, italicized font):

““Borrowing Base Portfolio Value” means, as of any date of determination, the aggregate of:

(a) except as set forth in clause (c) below, for any Borrowing Base Property that was acquired by a Borrowing Base Entity less than twelve (12) six (6) calendar months prior to such date, the lesser of (i) the quotient obtained by dividing (A) the Net Operating Income of such Borrowing Base Property as of such date by (B) the Capitalization Rate or (ii) the Net Purchase Price paid by such Borrowing Base Entity to acquire such Borrowing Base Property; and

(b)  for any Borrowing Base Property that was acquired by a Borrowing Base Entity twelve (12) six (6) calendar months or more prior to such date, the quotient obtained by dividing (i) the Net Operating Income of such Borrowing Base Property as of such date by (ii) the Capitalization Rate.; and

(c) for any Borrowing Base Property that was acquired by a Borrowing Base Entity less than six (6) calendar months prior to such date and at a capitalization rate of 7.0% or less, the quotient obtained by dividing (i) the Net Operating Income of such Borrowing Base Property as of such date by (ii) the Capitalization Rate, unless Administrative Agent consents (in its sole discretion) to use the Net Purchase Price paid by such Borrowing Base Entity to acquire such Borrowing Base Property in determining the value attributable to such Borrowing Base Property for purposes of calculating the Borrowing Base Portfolio Value.

Notwithstanding the foregoing, no more than twenty-five percent (25%) of the Borrowing Base Portfolio Value shall be calculated pursuant to clause (a)(ii) above and therefore, if such twenty-five percent (25%) is reached, the balance of the Borrowing Base Portfolio Value shall be calculated based on Net Operating Income divided by the Capitalization Rate.”

(c) The term “Consolidated Total Real Estate Value” in Section 1.01 of the Credit Agreement is hereby amended as follows (with the amendments identified in underlined, italicized font):

““Consolidated Total Real Estate Asset Value” means, as of any date of determination, the aggregate of:

(a) for any Real Estate Asset that was acquired by a Borrower Group Entity less than twelve (12) six (6) calendar months prior to such date, the lesser of (i) the quotient obtained by dividing (A) the Net Operating Income of such Real Estate Asset as of such date by (B) the Capitalization Rate and (ii) the Net Purchase Price paid by such Borrower Group Entity to acquire such Real Estate Asset; and

(b)  for any Real Estate Asset that was acquired by a Borrower Group Entity twelve (12) six (6) calendar months or more prior to such date, the quotient obtained by dividing (i) the Net Operating Income of such Real Estate Asset as of such date by (ii) the Capitalization Rate.

Notwithstanding the foregoing, no more than twenty-five percent (25%) of the Consolidated Total Real Estate Asset Value shall be calculated pursuant to clause (a)(ii) above and therefore, if such twenty-five percent (25%) is reached, the balance of the Consolidated Total Real Estate Asset Value shall be calculated based on Net Operating Income divided by the Capitalization Rate.”

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(d) The term “Funds From Operations” in Section 1.01 of the Credit Agreement is hereby amended as follows (with the amendments identified in underlined, italicized font):

““Funds From Operations” means, for any period, the sum of the following for the REIT (determined on a consolidated basis in accordance with GAAP): (a) net income plus (b) depreciation, amortization and non-cash stock-based compensation the net income (loss) of the Consolidated Entities for such period (calculated in accordance with GAAP), but adjusted to exclude (a) depreciation and amortization related to real estate, (b) gains and losses from the sale of real estate assets, (c) gains and losses from change in control of the REIT, (d) non-cash stock-based compensation, (e) impairment write-downs of real estate assets and investments in entities when the impairment is directly attributable to decreases in the value of depreciable real estate held by the entity, and (f) one-time property acquisition costs.”

(e) The term “Indebtedness” in Section 1.01 of the Credit Agreement is hereby amended as follows (with the amendments identified in underlined, italicized font):

““Indebtedness” means, as to any Person at a particular time, without duplication, all of the following, whether or not included as indebtedness or liabilities in accordance with GAAP:

(a) all obligations of such Person for borrowed money and all obligations of such Person evidenced by bonds, debentures, notes, loan agreements or other similar instruments;

(b) all direct or contingent obligations of such Person arising under letters of credit (including standby and commercial), bankers’ acceptances, bank guaranties, surety bonds and similar instruments;

(c) all obligations of such Person to pay the deferred purchase price of property or services (other than trade accounts payable in the ordinary course of business), to the extent such obligations constitute indebtedness for the purpose of GAAP;

(d) Capital Lease Obligations;

(e) all obligations of such Person to purchase, redeem, retire, defease or otherwise make any payment in respect of any Disqualified Capital Stock of such Person, valued, in the case of a redeemable preferred interest, at the greater of its voluntary or involuntary liquidation preference plus (without duplication and only to the extent required to be paid) accrued and unpaid dividends;

(f) all Guarantees of such Person in respect of any of the foregoing of another Person;

(g) the net amount of all Swap Obligations of such Person; and

(h) all obligations of the kind referred to in clauses (a) through (g) above secured by (or for which the holder of such obligation has an existing right, contingent or otherwise, to be secured by) any Lien on real property (including accounts and contract rights relating thereto) owned by such Person, whether or not such Person has assumed or become liable for the payment of such obligation, but limited to the lesser of (i) the fair market value of the property subject to such Lien and (ii) the aggregate amount of the obligations so secured.

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For all purposes hereof, the Indebtedness of any Person shall include the Indebtedness of any other Person (including any partnership in which such Person is a general partner) to the extent such Person is liable therefor as a result of such Person’s ownership interest in or other relationship with such entity, except to the extent the terms of such Indebtedness expressly provide that such Person is not liable therefor. The amount of any Capital Lease Obligations on any date shall be deemed to be the amount of Attributable Indebtedness in respect thereof as of such date. The net amount of any Swap Obligations on any date shall be deemed to be the Swap Termination Value thereof as of such date. All Loans shall constitute Indebtedness of the Borrower.”

(f) The term “Net Operating Income” in Section 1.01 of the Credit Agreement is hereby amended as follows (with the amendments identified in underlined, italicized font):

““Net Operating Income” means, as of any date, with respect to any Real Property, (A) all rental and other income actually collected and attributable to tenants in occupancy and pursuant to executed Leases with respect to such Real Property, annualized, based on a trailing three (3) month Property Financial Statement (adjusted to (a) eliminate income from tenants in bankruptcy unless and until such time as any such tenants emerge from bankruptcy as an operating business without having rejected their respective Leases in such bankruptcy, (b) eliminate income from tenants in default under their respective Leases after expiration of any applicable notice and cure periods with respect to the default in question, and (c) eliminate income from tenants with Leases that will expire within three (3) months after such date and (d) provide for vacancy and collection loss allowance equal to the greater of (i) actual vacancy and collection loss and (ii) 2.0%) (“Adjusted Revenue”), minus (B) the sum of (x) the amount of all expenses incurred in connection with operation of such Real Property for such period (adjusted for seasonality), including, without limitation, amounts accrued for the payment of real estate taxes, property maintenance, and insurance premiums, but excluding any interest expense or other debt service charges and property-related and corporate general and administrative expenses and any non-cash charges such as depreciation or amortization of financing costs, plus (y) a capital expenditures reserve equal to $0.15 per interior square foot of the improvements, plus (z) without duplication of the property management fee (if any) included in the expenses referred to in clause (x) immediately above, a property management fee equal to at least three percent (3%) of gross income (“Property Operating Expenses”). Net Operating Income shall be based on the most recently ended calendar quarter on or prior to such date for which a duly completed Property Worksheet have been delivered by the Borrower to Administrative Agent. Notwithstanding the foregoing:

1. for the purpose of calculating Net Operating Income for a Real Property that the Borrower does not directly or indirectly wholly own, the Net Operating Income of such Real Property shall be limited to a percentage of such Net Operating Income equal to the percentage of such Real Property owned, directly or indirectly, by the Borrower;

2. with respect to any Real Property being acquired in conjunction with an Borrowing, Net Operating Income, for the purposes of determining the Maximum Loan Amount at such time, shall be calculated as (I) projected, annualized rental and other income collectable and attributable to tenants in occupancy and paying rent, and pursuant to executed Leases (adjusted with the same conditions (a) – (d) above), minus (II) projected operating expenses on an annual basis, which shall be calculated as $0.55 per interior square foot (collectively, “Underwritten NOI”); and

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3. with respect to calculating the financial covenants under Section 6.07 as of the end of a calendar quarter, Net Operating Income from any Real Property purchased during such calendar quarter for which there is not yet a trailing three (3) month operating history, shall be calculated as the lower of (i) the Underwritten NOI for such Real Property, as determined at the time of acquisition of such Real Property, and (ii) such Real Property’s Adjusted Revenue minus such Real Property’s Property Operating Expenses, annualized, for the period corresponding to the applicable Borrower Group Entity’s ownership of such Real Property (i.e., trailing 1 month, trailing 2 month, etc.)”

(g) The term “Postal Lease” in Section 1.01 of the Credit Agreement is hereby amended as follows (with the amendments identified in underlined, italicized font):

““Postal Lease” means a Lease to the United States Postal Service (or any subdivision thereof) in the form of lease issued by the United States Postal Service from time to time, provided that (i) such form does not allow for the tenant thereunder to assign the Lease without the consent of the landlord thereunder, unless the assignor remains liable for all obligations of the tenant under the Lease from and after the assignment of the Lease, and (ii) the tenant under the Lease pays all real estate taxes at the property, either by direct payment to the municipality, or by reimbursing the landlord under the Lease.”

(h) Section 2.05(b)(vii) of the Credit Agreement is hereby amended as follows (with the amendments identified in underlined, italicized font):

“(vii) to the extent requested by the Administrative Agent, a UCC search report with respect to the direct and indirect Equity Interests owned by the Borrower in the Subsidiary that will directly own such Eligible Property; and”

(i) The paragraph immediately following Section 2.05(b)(viii) of the Credit Agreement is hereby amended as follows (with the amendments identified in underlined, italicized font):

“Upon receipt of the foregoing documents and information, the Administrative Agent shall promptly review same and, if after review of such documents and information If, after receipt and review by the Administrative Agent of the foregoing documents and information, the Administrative Agent is prepared to accept such Eligible Property (an “Approved Eligible Property”) as a Borrowing Base Property, the Administrative Agent shall promptly so notify the Borrower and each Lender promptly after receipt and completion of review of all of such documents and information.”

(j) Section 6.07(d) of the Credit Agreement is hereby amended as follows (with the amendments identified in underlined, italicized font):

“(d) Minimum Consolidated Tangible Net Worth. The Consolidated Tangible Net Worth to be less than (i) as of the last day of each calendar quarter ending September 30, 2019 and December 31, 2019, $50,000,000, and (ii) as of the last day of the calendar quarter ending March 31, 2020, $75,000,000, and (iii) as of the last day of each calendar quarter thereafter, the sum of (x) $75,000,000 plus (y) seventy-five percent (75%) of the aggregate net proceeds received by any Borrower Group Entity in connection with any offering of Equity Interests in the REIT or the Borrower on or after the Effective Date June 25, 2020.”

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(k) Paragraph 7 of Exhibit G of the Credit Agreement is hereby amended as follows (with the amendments identified in underlined, italicized font)”

“7. As of the date of this Borrowing Base Certificate, the aggregate value of the Borrowing Base is $_______________, such amount representing fifty sixty percent (50%) (60%) of the Borrowing Base Portfolio Value.”

Section 2. Borrower’s Representations. Borrower hereby represents and warrants to the Administrative Agent and the Lenders, as follows:

(a) each of the representations and warranties of Borrower contained or incorporated in the Credit Agreement, as amended by this Agreement, or any of the other Loan Documents to which it is a party, are true and correct in all material respects on and as of the date hereof (except if any such representation or warranty is expressly stated to have been made as of a specific date, then as of such specific date);

(b) as of the date hereof and immediately after giving effect to this Agreement, no Default and no Event of Default has occurred and is continuing;

(c) Borrower has all necessary limited partnership power and authority to execute, deliver and perform its obligations under this Agreement; Borrower has been duly authorized by all necessary limited partnership action on its part; and this Agreement has been duly and validly executed and delivered by Borrower and constitutes Borrower’s legal, valid and binding obligation, enforceable in accordance with its terms, except as such enforceability may be limited by (i) bankruptcy, insolvency, reorganization, moratorium or similar laws of general applicability affecting the enforcement of creditors’ rights and (ii) the application of general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law); and

(d) Borrower’s execution and delivery of this Agreement (i) does not require any consent or approval of, registration or filing with, or any other action by, any governmental authority, except for such as have been obtained or made and are in full force and effect, (ii) will not violate any applicable law or regulation or the charter, by-laws or other organizational documents of Borrower or any order of any governmental authority and (iii) will not violate or result in a default under any material indenture, agreement or other material instrument binding upon Borrower or any of its assets.

Section 3. Guarantor Parties’ Representations. Each Guarantor Party hereby represents and warrants to the Administrative Agent and the Lenders, as follows:

(a) each of the representations and warranties of such Guarantor Party contained or incorporated in the Guaranty or any of the other Loan Documents to which it is a party, are true and correct in all material respects on and as of the date hereof (except if any such representation or warranty is expressly stated to have been made as of a specific date, then as of such specific date);

(b) as of the date hereof and immediately after giving effect to this Agreement, such Guarantor Party is in compliance with its obligations under the Guaranty and each of the other Loan Documents to which it is a party;

6

(c) such Guarantor Party has all necessary corporate or limited liability company, as applicable, power and authority to execute, deliver and perform its obligations under this Agreement; such Guarantor Party has been duly authorized by all necessary corporate or limited liability company, as applicable, action on its part; and this Agreement has been duly and validly executed and delivered by such Guarantor Party and constitutes such Guarantor Party’s legal, valid and binding obligation, enforceable in accordance with its terms, except as such enforceability may be limited by (i) bankruptcy, insolvency, reorganization, moratorium or similar laws of general applicability affecting the enforcement of creditors’ rights and (ii) the application of general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law); and

(d) such Guarantor Party’s execution and delivery of this Agreement (i) does not require any consent or approval of, registration or filing with, or any other action by, any governmental authority, except for such as have been obtained or made and are in full force and effect, (ii) will not violate any applicable law or regulation or the charter, by-laws or other organizational documents of such Guarantor Party or any order of any governmental authority and (iii) will not violate or result in a default under any material indenture, agreement or other material instrument binding upon such Guarantor Party or any of its assets.

Section 4. Ratification.

(a) Borrower hereby (i) reaffirms, ratifies, confirms, and acknowledges its obligations under the Credit Agreement (as amended hereby) and the other Loan Documents to which it is a party and agrees to continue to be bound thereby and perform thereunder and (ii) agrees and acknowledges that the Credit Agreement (as amended hereby) and the other Loan Documents and all of Borrower’s obligations thereunder are and remain in full force and effect and, except as expressly provided herein, have not been affected, modified or amended.

(b) Each Guarantor Party hereby (i) reaffirms, ratifies, confirms, and acknowledges its obligations under the Guaranty and the other Loan Documents to which it is a party (after giving effect to this Agreement) and agrees to continue to be bound thereby and perform thereunder and (ii) agrees and acknowledges that the Guaranty and the other Loan Documents (after giving effect to this Agreement) and all of its obligations thereunder are and remain in full force and effect and, except as expressly provided herein, have not been affected, modified or amended.

Section 5. Miscellaneous.

(a) GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.

(b) Amendments, Etc. The terms of this Agreement may be waived, modified and amended only by an instrument in writing duly executed by the party hereto against whom enforcement of such waiver, modification or amendment is sought (provided that, subject to the terms of the Credit Agreement, the Administrative Agent may execute any such waiver, modification or amendment on behalf of the Lenders). Any such waiver, modification or amendment shall be binding upon Borrower, the Guarantors, the Administrative Agent and the Lenders.

(c) Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the respective successors and assigns of Borrower, the Guarantors, the Administrative Agent and the Lenders.

(d) Captions. The captions and section headings appearing herein are included solely for convenience of reference and are not intended to affect the interpretation of any provision of this Agreement.

(e) Counterparts. This Agreement may be executed in any number of counterparts, all of which taken together shall constitute one and the same instrument and any of the parties hereto may execute this Agreement by signing any such counterpart. Delivery of an executed counterpart of this Agreement by facsimile or email transmission shall be effective as manual delivery of an executed counterpart hereof.

(f) Severability. Any provision hereof which is held to be invalid, illegal or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such invalidity, illegality or unenforceability without affecting the validity, legality and enforceability of the remaining provisions hereof, and the invalidity of a particular provision in a particular jurisdiction shall not invalidate such provision in any other jurisdiction.

[remainder of page intentionally left blank]

7

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed and delivered as of the day and year first above written.

BORROWER:
POSTAL REALTY LP,
a Delaware limited partnership
By:	Postal Realty Trust, Inc.,
	Its general partner
	By:	/s/ Jeremy Garber
	Name:	Jeremy Garber
	Title:	President, Treasurer and Secretary

REIT:
POSTAL REALTY TRUST INC., a Maryland corporation
By:	/s/ Jeremy Garber
	Name:	Jeremy Garber
	Title:	President

[signatures continue on following pages]

SUBSIDIARY GUARANTORS:
A AND J ASSETS LLC
Alabama Postal Holdings, LLC
ARKANSAS POSTAL HOLDINGS LLC
ASSET 20024, L.L.C.
EASTERN POSTAL REALTY HOLDINGS, LLC
GARY GLEN PARK REALTY, LLC
GEORGIA POSTAL REALTY HOLDINGS LLC
Harbor Station, LLC
HILER BUFFALO LLC
Illinois Postal Holdings, LLC
INDIANA POSTAL REALTY HOLDINGS LLC
Iowa Postal Holdings, LLC
LOUISIANA POSTAL HOLDINGS LLC
Mass Postal Holdings LLC
Michigan Postal Holdings LLC
MIDWESTERN POSTAL REALTY HOLDINGS, LLC
Missouri & Minnesota Postal Holdings, LLC
NEW MEXICO POSTAL REALTY HOLDINGS LLC
Ohio Postal Holdings, LLC
Pennsylvania Postal Holdings, LLC
Postal Holdings LLC
PPP ASSETS, LLC
SOUTH CAROLINA POSTAL HOLDINGS LLC
SOUTHERN POSTAL REALTY HOLDINGS, LLC
Tennessee Postal Holdings, LLC
UNITED POST OFFICE INVESTMENTS, LLC
UPH MERGER SUB LLC
WESTERN POSTAL REALTY HOLDINGS, LLC
Wisconsin Postal Holdings, LLC
By:	/s/ Andrew Spodek
	Name:	Andrew Spodek
	Title:	Chief Executive Officer

[signatures continue on following page]

ADMINISTRATIVE AGENT:
PEOPLE’S UNITED BANK, NATIONAL ASSOCIATION
By:	/s/ Samuel A. Bluso
	Name:	Samuel A. Bluso
	Title:	Managing Director

[end of signatures]

EX-31.1

Exhibit 31.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER

PURSUANT TO RULE 13a-14(a) OF THE EXCHANGE ACT, AS AMENDED,

AS ADOPTED PURSUANT TO

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Andrew Spodek, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Postal Realty Trust, Inc. (the “registrant”) for the quarterly period ended March 31, 2020;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flow of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under my supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to me by others within those entities, particularly during the period in which this report is being prepared;

(b) Intentionally omitted;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report my conclusions about the effectiveness of the disclosure controls and procedures as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: June 26, 2020	/s/ Andrew Spodek
	Andrew Spodek, Chief Executive Officer (Principal Executive Officer) Postal Realty Trust, Inc.

EX-31.2

Exhibit 31.2

CERTIFICATION OF CHIEF EXECUTIVE OFFICER

PURSUANT TO RULE 13a-14(a) OF THE EXCHANGE ACT, AS AMENDED,

AS ADOPTED PURSUANT TO

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Jeremy Garber, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Postal Realty Trust, Inc. (the “registrant”) for the quarterly period ended March 31, 2020;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flow of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under my supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to me by others within those entities, particularly during the period in which this report is being prepared;

(b) Intentionally omitted;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report my conclusions about the effectiveness of the disclosure controls and procedures as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: June 26, 2020	/s/ Jeremy Garber
	Jeremy Garber, President, Treasurer and Secretary (Principal Financial Officer) Postal Realty Trust, Inc.

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

Certificate of Principal Executive Officer

In connection with the Quarterly Report on Form 10-Q of Postal Realty Trust, Inc. (the “Company”) on Form 10-Q for the quarterly period ended March 31, 2020 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Andrew Spodek, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company at the dates and for the periods presented.

	Postal Realty Trust, Inc.
Date: June 26, 2020	By:	/s/ Andrew Spodek
		Andrew Spodek Chief Executive Officer and Director (Principal Executive Officer)

This written report is being furnished to the Securities and Exchange Commission as an exhibit to the Report. A signed original of this written statement required by Section 906 has been provided to Postal Realty Trust, Inc. and will be retained by Postal Realty Trust, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.

EX-32.2

Exhibit 32.2

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

Certificate of Principal Financial Officer

In connection with the Quarterly Report on Form 10-Q of Postal Realty Trust, Inc. (the “Company”) on Form 10-Q for the quarterly period ended March 31, 2020 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Jeremy Garber, President, Treasurer and Secretary of the Company, certify, pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company at the dates and for the periods presented.

	Postal Realty Trust, Inc.
Date: June 26, 2020	By:	/s/ Jeremy Garber
		Jeremy Garber President, Treasurer and Secretary (Principal Financial Officer)

This written report is being furnished to the Securities and Exchange Commission as an exhibit to the Report. A signed original of this written statement required by Section 906 has been provided to Postal Realty Trust, Inc. and will be retained by Postal Realty Trust, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.

XML

Debt (Details 1) - USD ($)	Mar. 31, 2020	Dec. 31, 2019
Debt Disclosure [Abstract]
2020 - Remaining	$ 82,151
2021	193,899
2022	205,580
2023	68,218,425
2024	229,234
Thereafter	2,289,764
Total	$ 71,219,053	$ 57,246,062

XML

Leases (Details Narrative)	3 Months Ended
	Mar. 31, 2020 properties
Leases, Operating [Textual]
Lease expiration, description	The lease term and expires on September 30, 2059.
Number of holdover properties	31

XML

Earnings Per Share (Details)	3 Months Ended
	Mar. 31, 2020 USD ($) $ / shares shares	[1]
Numerator for earnings per share - basic and diluted:
Net loss attributable to common stockholders	$ (677,755)
Less: Income attributable to participating securities	(71,535)
Numerator for earnings per share - basic and diluted	$ (749,290)
Denominator for earnings per share - basic and diluted | shares	5,174,569
Basic and diluted earnings per share | $ / shares	$ (0.14)

[1] The combined statements of operations prior to May 17, 2019 represents the activity of the Predecessor and EPS was not applicable.

XML

Stockholder's Equity (Tables)

3 Months Ended

Mar. 31, 2020

Equity [Abstract]

Schedule of dividends declared

Declaration Date	Record Date	Date Paid	Amount Per Share
January 30, 2020	February 14, 2020	February 28, 2020	$	0.17

Schedule of unvested equity

	Restricted Shares (1)(2)			LTIP Units (3)		Restricted Stock Units ("RSUs") (4)		Total Shares			Weighted Average Grant Date Fair Value
Outstanding, at beginning of period		148,847			120,003		—		268,850		$	16.96
Granted		104,051			66,938		62,096		233,085		$	13.72
Converted to common stock		—			—		—		—			—
Vesting of restricted stock		—			—		—		—			—
Forfeited		(588	)		—		—		(588	)	$	17.00
Outstanding, at end of period		252,310			186,941		62,096		501,347		$	15.45

Explanatory Notes:

(1) Represents restricted shares awards included in common stock.

(2) The time-based restricted share awards granted to our officers and employees typically vest in three annual installments or cliff vest at the end of eight years. The time-based restricted share awards granted to our directors' vest over one to three years.

(3) LTIP units to our officers and employees typically vest over three to eight years. During the quarter ended March 31, 2020, 2,843 LTIPs issued to an employee vested as a result of a modification of the award. In May 2020, pursuant to the Plan, the Company issued 27,365 LTIP Units to the Company's CEO in lieu of his salary payable for the period from the one year anniversary of the IPO to December 31, 2020. LTIP Units issued to the Company's CEO in lieu of cash compensation cliff vest on the eighth anniversary of the date of grant.

(4) Includes 38,672 RSUs granted to certain officers of the Company during the three months ended March 31, 2020 subject to the achievement of a service condition and a market condition. Such RSUs are market-based awards and are subject to the achievement of hurdles relating to the Company's absolute total stockholder return and continued employment with the Company over the approximately three-year period from the grant date through December 31, 2022. The number of market-based RSUs is based on the number of shares issuable upon achievement of the market-based metric at target. Also, includes 13,253 time-based RSUs issued for 2019 incentive bonuses to certain employees that vested fully on February 14, 2020, the date of grant and 10,171 time-based RSUs granted to certain employees for their election to defer 2020 salary that vest on December 31, 2020. RSUs reflect the right to receive shares of Class A common stock, subject to the applicable vesting criteria.

XML

Debt (Tables)

3 Months Ended

Mar. 31, 2020

Debt Disclosure [Abstract]

Schedule of principal balances of mortgage loans payable

Outstanding Balance as of March 31, 2020			Outstanding Balance as of December 31, 2019			Interest Rate at March 31, 2020		Maturity Date
Revolving Credit Facility(1)	$	68,000,000		$	54,000,000		LIBOR+170bps	(2)	September 2023
Vision Bank(3)		1,506,858			1,522,672		4.00	%	September 2036
First Oklahoma Bank(4)		374,582			378,005		4.50	%	December 2037
Vision Bank – 2018(5)		892,613			900,385		5.00	%	January 2038
Seller Financing(6)		445,000			445,000		6.00	%	January 2025
Total Principal		71,219,053			57,246,062
Unamortized deferred financing costs		(34,534	)		(35,058	)
Total Debt	$	71,184,519		$	57,211,004

Explanatory Notes:

(1) On September 27, 2019, the Company entered into a credit agreement (as amended, the "Credit Agreement") with People's United Bank, National Association, individually and as administrative agent, BMO Capital Markets Corp., as syndication agent, and certain other lenders. The Credit Agreement provides for revolving commitments in an aggregate principal amount of $100.0 million with an accordion feature ("the Accordion Feature") that permits the Company to borrow up to an additional $100.0 million for an aggregate total of $200.0 million, subject to customary terms and conditions, and a maturity date of September 27, 2023. On January 30, 2020, the Company amended the Credit Agreement in order to exercise a portion of the Accordion Feature to increase the maximum amount available under the Credit Facility to $150.0 million, subject to the borrowing base properties identified therein remaining unencumbered and subject to an enforceable lease. On June 25, 2020, the Company further amended the Credit Agreement to revise, among other items, certain definitions and borrowing base calculations to increase available capacity, as well as the restrictive covenant pertaining to Consolidated Tangible Net Worth (as defined in such amendment).

The interest rates applicable to loans under the Credit Facility are, at our option, equal to either a base rate plus a margin ranging from 0.7% to 1.4% per annum or LIBOR plus a margin ranging from 1.7% to 2.4% per annum, each based on a consolidated leverage ratio. In addition, the Company will pay, for the period through and including the calendar quarter ended March 31, 2020, an unused facility fee on the revolving commitments under the Credit Facility of 0.75% per annum for the first $100 million and 0.25% per annum for the portion of revolving commitments exceeding $100.0 million, and for the period thereafter, an unused facility fee of 0.25% per annum for the aggregate unused revolving commitments, with both periods utilizing calculations of daily unused commitments under the Credit Facility.

During the three months ended March 31, 2020, the Company incurred $0.2 million of unused fees related to the Credit Facility. The Company's ability to borrow under the Credit Facility is subject to ongoing compliance with a number of customary affirmative and negative covenants. As of March 31, 2020, the Company was in compliance with all of the Credit Facility's debt covenants.

(2) As of March 31, 2020, the one-month LIBOR rate was 0.99%.

(3) Five properties are collateralized under this loan as of March 31, 2020 with Mr. Spodek as the guarantor. On September 8, 2021 and every five years thereafter, the interest rate will reset at a variable annual rate of Wall Street Journal Prime Rate ("Prime") + 0.5%.

(4) The loan is collateralized by first mortgage liens on four properties and a personal guarantee of payment by Mr. Spodek. Interest rate resets on December 31, 2022 to Prime + 0.25%.

(5) The loan is collateralized by first mortgage liens on one property and a personal guarantee of payment by Mr. Spodek. Interest rate resets on January 31, 2023 to Prime + 0.5%.

(6) In connection with the acquisition of a property, we obtained seller financing secured by the property in the amount of $0.4 million requiring five annual payments of principal and interest of $105,661 with the first installment due on January 2, 2021 based on a 6.0% interest rate per annum through January 2, 2025.

Schedule of Principal payments of mortgage loans payable

The scheduled principal repayments of indebtedness as of March 31, 2020 are as follows:

Year Ending December 31,	Amount
2020 – Remaining	$	82,151
2021		193,899
2022		205,580
2023		68,218,425
2024		229,234
Thereafter		2,289,764
Total	$	71,219,053

XML

Consolidated Balance Sheets (Parenthetical) - $ / shares	Mar. 31, 2020	Dec. 31, 2019
Class A
Common stock, par value	$ 0.01	$ 0.01
Common stock, shares authorized	500,000,000	500,000,000
Common stock, shares issued	5,392,906	5,285,904
Common stock, shares outstanding	5,392,906	5,285,904
Class B
Common stock, par value	$ 0.01	$ 0.01
Common stock, shares authorized	27,206	27,206
Common stock, shares issued	27,206	27,206
Common stock, shares outstanding	27,206	27,206

XML

Consolidated and Combined Consolidated Statements of Cash Flows - USD ($)	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
Cash flows from operating activities:
Net (loss) income	$ (1,029,826)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation	926,096
Amortization of in-place intangibles	1,108,772
Write-off and amortization of deferred financing costs	104,462
Amortization of above/below market leases	(316,275)
Amortization of intangible liability	(1,105)
Deferred rent receivable	(12,708)
Deferred rent expense payable	4,771
Deferred tax liability
Equity-based compensation	713,810
Changes in assets and liabilities:
Rent and other receivables	(14,372)
Prepaid expenses and other assets	103,336
Accounts payable, accrued expenses and other	(199,579)
Net cash provided by operating activities	1,387,382
Cash flows from investing activities:
Acquisition of real estate	(22,410,688)
Acquisition and other deposits	(689,250)
Capital improvements	(48,295)
Other investing activities	(63,167)
Net cash used in investing activities	(23,211,400)
Cash flows from financing activities:
Repayments of secured borrowings	(27,010)
Proceeds from revolving credit facility	14,000,000
Debt issuance costs	(386,233)
Capital contributions
Distributions and dividends	(1,401,733)
Other financing activities	(8,803)
Net cash provided by financing activities	12,176,221
Net (decrease) increase in Cash and Escrows and Reserves	(9,647,797)
Cash and Escrows and Reserves at the beginning of period	13,183,603
Cash and Escrow and Reserves at the end of period	$ 3,535,806
Predecessor
Cash flows from operating activities:
Net (loss) income		$ 257,076
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation		264,150
Amortization of in-place intangibles		216,293
Write-off and amortization of deferred financing costs		3,179
Amortization of above/below market leases		(85,755)
Deferred rent receivable		(5,166)
Deferred rent expense payable		532
Deferred tax liability		(65,895)
Equity-based compensation
Changes in assets and liabilities:
Rent and other receivables		109,044
Prepaid expenses and other assets		2,067
Accounts payable, accrued expenses and other		(178,212)
Net cash provided by operating activities		517,313
Cash flows from investing activities:
Acquisition of real estate		(645,120)
Acquisition and other deposits
Capital improvements		(11,840)
Other investing activities
Net cash used in investing activities		(656,960)
Cash flows from financing activities:
Repayments of secured borrowings		(284,801)
Proceeds from revolving credit facility
Debt issuance costs
Capital contributions		1,774,879
Distributions and dividends		(1,218,036)
Other financing activities
Net cash provided by financing activities		272,042
Net (decrease) increase in Cash and Escrows and Reserves		132,395
Cash and Escrows and Reserves at the beginning of period		861,875
Cash and Escrow and Reserves at the end of period		$ 994,270

XML

Summary of Significant Accounting Policies (Policies)

3 Months Ended

Mar. 31, 2020

Accounting Policies [Abstract]

Basis of Presentation

Basis of Presentation

The accompanying unaudited Consolidated and Combined Consolidated Financial Statements include the financial position and results of operations of the Company and its Predecessor, the Operating Partnership and its wholly owned subsidiaries. The Company did not have any operations from the date of formation to May 17, 2019. The Predecessor represents a combination of certain entities holding interests in real estate that were commonly controlled prior to the Formation Transactions. Due to their common control, the financial statements of the separate Predecessor entities which owned the properties and the management company are presented on a combined consolidated basis. The effects of all significant intercompany balances and transactions have been eliminated.

The Company consolidates the Operating Partnership, a VIE in which the Company is considered the primary beneficiary. The primary beneficiary is the entity that has (i) the power to direct the activities that most significantly impact the entity's economic performance and (ii) the obligation to absorb losses of the VIE or the right to receive benefits from the VIE that could be significant to the VIE.

A non-controlling interest is defined as the portion of the equity in an entity not attributable, directly or indirectly, to the Company. Non-controlling interests are required to be presented as a separate component of equity in the Consolidated Balance Sheets. Accordingly, the presentation of net income (loss) reflects the income attributed to controlling and non-controlling interests.

The accompanying consolidated and combined consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States ("GAAP") for interim financial information and with the instructions to Form 10-Q and Article 8 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements.

This interim financial information should be read in conjunction with the consolidated and combined consolidated financial statements included in the Company's Annual Report on Form 10-K for the year ended December 31, 2019. Management believes that all adjustments of a normal, recurring nature considered necessary for a fair presentation have been included. This interim financial information does not necessarily represent or indicate what the operating results will be for the year ending December 31, 2020. All material intercompany accounts and transactions have been eliminated.

Use of Estimates

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities and the reported amounts of revenues and expenses during the reporting period. Although management believes its estimates are reasonable, actual results could differ from those estimates.

Cash and Escrows and Reserves

Cash and Escrows and Reserves

Cash included unrestricted cash with a maturity of three months or less. Escrows and reserves consisted of restricted cash. The following table provides a reconciliation of cash and escrows and reserves reported within the Company's Consolidated Balance Sheets and Consolidated and Combined Consolidated Statements of Cash Flows:

	As of
	March 31, 2020		December 31, 2019
Cash	$	2,844,040	$	12,475,537
Escrows and reserves:
Maintenance reserve		664,165		663,339
ESPP reserve		27,601		44,727
Cash and escrows and reserves	$	3,535,806	$	13,183,603

Fair Value of Financial Instruments

Fair Value of Financial Instruments

The following disclosure of estimated fair value was determined by management using available market information and appropriate valuation methodologies. However, considerable judgment is necessary to interpret market data and develop estimated fair value. Accordingly, the estimates presented herein are not necessarily indicative of the amounts the Company could realize on disposition of the assets and liabilities as of March 31, 2020 and December 31, 2019. The use of different market assumptions and/or estimation methodologies may have a material effect on the estimated fair value amounts. Cash, escrows and reserves, receivables, prepaid expenses, accounts payable and accrued expenses are carried at amounts which reasonably approximate their fair values as of March 31, 2020 and December 31, 2019 due to their short maturities.

The fair value of the Company's borrowings under its Credit Facility approximates carrying value. The fair value of the Company's secured borrowings aggregated approximately $3.3 million and $3.2 million as compared to the principal balance of $3.2 million and $3.2 million as of March 31, 2020 and December 31, 2019, respectively. The fair value of the Company's debt was categorized as a Level 3 basis (as provided by ASC 820, Fair Value Measurements and Disclosures). The fair value of these financial instruments was determined by using a discounted cash flow analysis based on the borrowing rates currently available to the Company for loans with similar terms and maturities. The fair value of the mortgage debt was determined by discounting the future contractual interest and principal payments by a market rate.   

Disclosure about fair value of assets and liabilities is based on pertinent information available to management as of March 31, 2020 and December 31, 2019. Although management is not aware of any factors that would significantly affect the fair value amounts, such amounts have not been comprehensively revalued for purposes of these financial statements since March 31, 2020 and current estimates of fair value may differ significantly from the amounts presented herein.

Impairment

Impairment

The carrying value of real estate investments and related intangible assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment exists when the carrying amount of an asset exceeds the aggregate projected future cash flows over the anticipated holding period on an undiscounted basis. An impairment loss is measured based on the excess of the asset's carrying amount over its estimated fair value. Impairment analyses will be based on current plans, intended holding periods and available market information at the time the analyses are prepared. If estimates of the projected future cash flows, anticipated holding periods or market conditions change, the evaluation of impairment losses may be different and such differences may be material. The evaluation of anticipated cash flows is subjective and is based, in part, on assumptions regarding future occupancy, rental rates and capital requirements that could differ materially from actual results. No impairments were recorded during the three months ended March 31, 2020 and 2019.

Concentration of Credit Risks

Concentration of Credit Risks 

As of March 31, 2020, the Company's properties were leased to a single tenant, the USPS, other than a de minimis non-postal tenant that shares space in a building leased to the USPS. For the three months ended March 31, 2020, no state had a concentration of rental income over 10% as a percentage of total rental income. For the three months ended March 31, 2019, our total rental income of $1.5 million was concentrated in the following states: Texas (13.8%), Massachusetts (13.4%), Wisconsin (12.3%) and Ohio (10.4%). The ability of the USPS to honor the terms of their leases is dependent upon regulatory, economic, environmental or competitive conditions in any of these areas and could have an effect on our overall business results. 

The Company has deposited cash and maintains its bank deposits with large financial institutions in amounts that exceed federally insured limits. The Company has not experienced any losses in such accounts.

Equity Based Compensation

Equity Based Compensation

The Company accounts for equity-based compensation in accordance with ASC Topic 718 Compensation – Stock Compensation, which requires the Company to recognize an expense for the grant date fair value of equity-based awards. Equity-classified stock awards granted to employees and non-employees that have a service condition and/or a market condition are measured at fair value at date of grant and remeasured at fair value only upon a modification of the award. The Company will record forfeitures as they occur.

The Company recognizes compensation expense on a straight-line basis over the requisite service period of each award, with the amount of compensation expense recognized at the end of a reporting period at least equal the portion of fair value of the respective award at grant date or modification date, as applicable, that has vested through that date. For awards with a market condition, compensation cost is not reversed if a market condition is not met so long as the requisite service has been rendered, as a market condition does not represent a vesting condition.

See Note 11. Stockholder's Equity for further details.

Earnings per Share

Earnings per Share

The Company calculates net loss per share based upon the weighted average shares outstanding less issued and outstanding non-vested shares of Class A common stock for the period beginning May 17, 2019. Diluted earnings per share is calculated after giving effect to all potential dilutive shares outstanding during the period. There were 2,827,737 potentially dilutive shares outstanding related to the issuance of OP Units and LTIP Units held by non-controlling interests as of March 31, 2020.

Future Application of Accounting Standards

Future Application of Accounting Standards

In February 2016, the FASB issued ASU 2016-02, Leases; in July 2018, the FASB issued ASU 2018-10, Codification Improvements to Topic 842, Leases, and ASU 2018-11, Leases — Targeted Improvements; and in December 2018, the FASB issued ASU 2018-20, Narrow-Scope Improvements for Lessors. This group of ASUs is collectively referred to as Topic 842. Topic 842 supersedes the existing standards for lease accounting (Topic 840, Leases). Topic 842 will be effective for the Company on January 1, 2021 as a result of its classification as an emerging growth company.

The Company expects to elect the practical expedients provided by Topic 842, including: the package of practical expedients that allows an entity not to reassess upon adoption (i) whether an expired or existing contract contains a lease, (ii) whether a lease classification related to expired or existing lease arrangements, and (iii) whether costs incurred on expired or existing leases qualify as initial direct costs, and as a lessor, the practical expedient not to separate certain non-lease components, such as common area maintenance, from the lease component if the timing and pattern of transfer are the same for the non-lease component and associated lease component, and the lease component would be classified as an operating lease if accounted for separately.

Topic 842 requires lessees to record most leases on their balance sheet through a right-of-use ("ROU") model, in which a lessee records an ROU asset and a lease liability on their balance sheet. Leases that are less than 12 months do not need to be accounted for under the ROU model. Lessees will account for leases as financing or operating leases, with the classification affecting the timing and pattern of expense recognition in the income statement. Lease expense will be recognized based on the effective interest method for leases accounted for as finance leases and on a straight-line basis over the term of the lease for leases accounted for as operating leases. As of March 31, 2020, the Company was the lessee under one office lease and one ground lease that would require accounting under the ROU model.

The accounting by a lessor under Topic 842 is largely unchanged from that of Topic 840. Under Topic 842, lessors will continue to account for leases as a sales-type, direct-financing, or operating. A lease will be treated as a sale if it is considered to transfer control of the underlying asset to the lessee. A lease will be classified as direct-financing if risks and rewards are conveyed without the transfer of control. Otherwise, the lease is treated as an operating lease. Topic 842 requires accounting for a transaction as a financing in a sale leaseback in certain circumstances, including when the seller-lessee is provided an option to purchase the property from the landlord at the tenant's option. The Company expects that this provision could change the accounting for these types of leases in the future. Topic 842 also includes the concept of separating lease and non-lease components. Under Topic 842, non-lease components, such as common area maintenance, would be accounted for under Topic 606 and separated from the lease payments. However, the Company will elect the lessor practical expedient allowing the Company to not separate these components when certain conditions are met. Upon adoption of Topic 842, the Company expects to combine tenant reimbursements with rental income on its consolidated statements of operations.

In September 2016, the FASB issued ASU No. 2016-13, Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments and in November 2018 issued ASU No. 2018-19, Codification Improvements to Topic 326, Financial Instruments - Credit Losses. The guidance changes how entities will measure credit losses for most financial assets and certain other instruments that are not measured at fair value through net income. The guidance replaces the current 'incurred loss' model with an 'expected loss' approach. The Company will also be required to disclose information about how it developed the allowances, including changes in the factors that influenced the Company's estimate of expected credit losses and the reasons for those changes. ASU No. 2018-19 excludes operating lease receivables from the scope of this guidance. This guidance will be effective for the Company on January 1, 2023 as a result of its classification as an emerging growth company. The Company is currently in the process of evaluating the impact the adoption of the guidance will have on its consolidated financial statements. 

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Earnings Per Share

3 Months Ended

Mar. 31, 2020

Earnings Per Share [Abstract]

Earnings Per Share

Note 10. Earnings Per Share

Earnings per share ("EPS") is calculated by dividing net income (loss) attributable to common stockholders by the weighted average number of shares outstanding for the period. The following table presents a reconciliation of income (loss) from operations used in the basic and diluted EPS calculations.⁽¹⁾

	For the Three Months Ended March 31, 2020
Numerator for earnings per share – basic and diluted:
Net loss attributable to common stockholders	$	(677,755	)
Less: Income attributable to participating securities		(71,535	)
Numerator for earnings per share — basic and diluted	$	(749,290	)
Denominator for earnings per share – basic and diluted		5,174,569
Basic and diluted earnings per share	$	(0.14	)

Explanatory Note:

(1) The combined statements of operations prior to May 17, 2019 represents the activity of the Predecessor and EPS was not applicable.

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Debt

3 Months Ended

Mar. 31, 2020

Debt Disclosure [Abstract]

Debt

Note 6. Debt

The following table summarizes the Company's indebtedness as of March 31, 2020 and December 31, 2019:

	Outstanding Balance as of March 31, 2020			Outstanding Balance as of December 31, 2019			Interest Rate at March 31, 2020			Maturity Date
Revolving Credit Facility(1)	$	68,000,000		$	54,000,000			LIBOR+170bps	(2)	September 2023
Vision Bank(3)		1,506,858			1,522,672			4.00	%	September 2036
First Oklahoma Bank(4)		374,582			378,005			4.50	%	December 2037
Vision Bank – 2018(5)		892,613			900,385			5.00	%	January 2038
Seller Financing(6)		445,000			445,000			6.00	%	January 2025
Total Principal		71,219,053			57,246,062
Unamortized deferred financing costs		(34,534	)		(35,058	)
Total Debt	$	71,184,519		$	57,211,004

Explanatory Notes:

(1) On September 27, 2019, the Company entered into a credit agreement (as amended, the "Credit Agreement") with People's United Bank, National Association, individually and as administrative agent, BMO Capital Markets Corp., as syndication agent, and certain other lenders. The Credit Agreement provides for revolving commitments in an aggregate principal amount of $100.0 million with an accordion feature ("the Accordion Feature") that permits the Company to borrow up to an additional $100.0 million for an aggregate total of $200.0 million, subject to customary terms and conditions, and a maturity date of September 27, 2023. On January 30, 2020, the Company amended the Credit Agreement in order to exercise a portion of the Accordion Feature to increase the maximum amount available under the Credit Facility to $150.0 million, subject to the borrowing base properties identified therein remaining unencumbered and subject to an enforceable lease. On June 25, 2020, the Company further amended the Credit Agreement to revise, among other items, certain definitions and borrowing base calculations to increase available capacity, as well as the restrictive covenant pertaining to Consolidated Tangible Net Worth (as defined in such amendment).

The interest rates applicable to loans under the Credit Facility are, at our option, equal to either a base rate plus a margin ranging from 0.7% to 1.4% per annum or LIBOR plus a margin ranging from 1.7% to 2.4% per annum, each based on a consolidated leverage ratio. In addition, the Company will pay, for the period through and including the calendar quarter ended March 31, 2020, an unused facility fee on the revolving commitments under the Credit Facility of 0.75% per annum for the first $100 million and 0.25% per annum for the portion of revolving commitments exceeding $100.0 million, and for the period thereafter, an unused facility fee of 0.25% per annum for the aggregate unused revolving commitments, with both periods utilizing calculations of daily unused commitments under the Credit Facility.

During the three months ended March 31, 2020, the Company incurred $0.2 million of unused fees related to the Credit Facility. The Company's ability to borrow under the Credit Facility is subject to ongoing compliance with a number of customary affirmative and negative covenants. As of March 31, 2020, the Company was in compliance with all of the Credit Facility's debt covenants.

(2) As of March 31, 2020, the one-month LIBOR rate was 0.99%.

(3) Five properties are collateralized under this loan as of March 31, 2020 with Mr. Spodek as the guarantor. On September 8, 2021 and every five years thereafter, the interest rate will reset at a variable annual rate of Wall Street Journal Prime Rate ("Prime") + 0.5%.

(4) The loan is collateralized by first mortgage liens on four properties and a personal guarantee of payment by Mr. Spodek. Interest rate resets on December 31, 2022 to Prime + 0.25%.

(5) The loan is collateralized by first mortgage liens on one property and a personal guarantee of payment by Mr. Spodek. Interest rate resets on January 31, 2023 to Prime + 0.5%.

(6) In connection with the acquisition of a property, we obtained seller financing secured by the property in the amount of $0.4 million requiring five annual payments of principal and interest of $105,661 with the first installment due on January 2, 2021 based on a 6.0% interest rate per annum through January 2, 2025.

The scheduled principal repayments of indebtedness as of March 31, 2020 are as follows:

Year Ending December 31,	Amount
2020 – Remaining	$	82,151
2021		193,899
2022		205,580
2023		68,218,425
2024		229,234
Thereafter		2,289,764
Total	$	71,219,053

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Organization and Description of Business (Details Narrative)	3 Months Ended
	Mar. 31, 2020 properties States $ / shares shares	Dec. 31, 2019 $ / shares shares	May 17, 2019 $ / shares	May 16, 2019 properties	May 15, 2019 $ / shares shares
Business Description and Basis of Presentation [Line Item]
Common stock, shares authorized					600,000,000
Common stock, par value | $ / shares					$ 0.01
Percentage of interest in operating partnership	65.80%
IPO [Member]
Business Description and Basis of Presentation [Line Item]
Common stock, shares authorized					500,000,000
Common stock, par value | $ / shares					$ 0.01
Preferred stock, shares authorized					100,000,000
Class A [Member]
Business Description and Basis of Presentation [Line Item]
Common stock, shares authorized	500,000,000	500,000,000
Common stock, par value | $ / shares	$ 0.01	$ 0.01	$ 0.01
Common stock, shares issued	5,392,906	5,285,904
Class B [Member]
Business Description and Basis of Presentation [Line Item]
Common stock, shares authorized	27,206	27,206
Common stock, par value | $ / shares	$ 0.01	$ 0.01
Common stock, shares issued	27,206	27,206
Postal Realty Management [Member]
Business Description and Basis of Presentation [Line Item]
Number of properties managed | properties	403
LLCs, UPH and the limited partnership [Member] | Predecessor [Member]
Business Description and Basis of Presentation [Line Item]
Number of properties | properties				190
Number of States | properties				33
USPS [Member]
Business Description and Basis of Presentation [Line Item]
Number of properties | properties	549
Number of States | States	45
Postal Realty Trust, Inc. [Member]
Business Description and Basis of Presentation [Line Item]
Organization date	Nov. 19, 2018
NPM [Member]
Business Description and Basis of Presentation [Line Item]
Formation date	Nov. 17, 2004

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Real Estate Acquisitions (Details)	3 Months Ended
	Mar. 31, 2020 USD ($) properties	[2],[3],[4]
Total purchase price	$ 30,525,974	[1]
Number of Properties | properties	83
Land [Member]
Total purchase price	$ 4,824,009
Building and Improvements [Member]
Total purchase price	24,605,963
Tenant Improvements [Member]
Total purchase price	287,749
In-place lease intangibles [Member]
Total purchase price	2,453,318
Above-market leases [Member]
Total purchase price	7,148
Below Market Leases [Member]
Total purchase price	(1,618,115)
Other [Member]
Total purchase price	$ (34,098)	[5]

[1] Includes acquisition costs of $0.3 million for the three months ended March 31, 2020.

[2] Includes the acquisition of 20 postal properties in individual or smaller portfolio transactions for approximately $8.1 million, including closing costs.

[3] Includes the acquisition of a 21-building portfolio leased to the USPS. The contract purchase price for the portfolio was $13.8 million, exclusive of closing costs, and giving effect to 483,333 OP Units issued to the sellers at a value of $17.00 per unit. The closing price of the Company's common stock on January 10, 2020 was $16.39; therefore, total consideration at closing, including closing costs, was approximately $13.6 million of which $7.9 million represented the non-cash consideration (the value of  the OP Units) issued to the sellers.

[4] Includes the acquisition of a 42-building portfolio leased to the USPS. The aggregate purchase price of such portfolio was approximately $8.8 million, including closing costs, which was funded with borrowings under our Credit Facility.

[5] Includes an intangible liability related to unfavorable operating leases on three properties that is included in "Accounts Payable, accrued expenses and other" on the Company's Consolidated Balance Sheets.

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Intangible Assets and Liabilities (Details Narrative) - USD ($)	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
Intangible Assets and Liabilities (Textual)
Amortization of in-place intangibles	$ 1,108,772
Amortization of acquired above market leases	3,106
Amortization of acquired below market leases	$ 300,000
Predecessor [Member]
Intangible Assets and Liabilities (Textual)
Amortization of in-place intangibles		$ 216,293
Amortization of acquired above market leases		2,370
Amortization of acquired below market leases		$ 100,000

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Stockholder's Equity (Details Narrative) - USD ($)	1 Months Ended		3 Months Ended
	Mar. 31, 2020	May 17, 2019	Mar. 31, 2020
Class of Stock [Line Items]
Remaining shares available for future issuance	40,237		40,237
Maximum number of restricted shares	541,584		541,584
Dividends paid	$ 1,400,000		$ 1,400,000
Total unrecognized compensation cost related to unvested awards	$ 6,100,000		6,100,000
Total recognized compensation expense			$ 700,000
Expected to be recognized over a weighted average period			3 years 7 months 24 days
Stock based compensation plans vesting period			5 years
Non-controlling Interest [Member]
Class of Stock [Line Items]
OPU and LTIP, description			The Company issued 483,333 OP Units in connection with a portfolio that the Company acquired, 53,230 LTIP Units to the Company's CEO for his 2019 incentive bonus and 13,708 LTIP Units to the Company's CEO during the three months ended March 31, 2020. As of March 31, 2020, and December 31, 2019, non-controlling interests consisted of 2,640,795 OP Units and 186,942 LTIP Units and 2,157,462 OP Units and 120,004 LTIP Units, respectively. This represented approximately 34.2% and 30.0% of the outstanding Operating Partnership units as of March 31, 2020 and December 31, 2019, respectively. Operating Partnership units and shares of common stock have essentially the same economic characteristics, as they share equally in the total net income or loss distributions of the Operating Partnership. Beginning on or after the date which is 12 months after the later of (i) the completion of the IPO or (ii) the date on which a person first became a holder of common units, each limited partner and assignees of limited partners will have the right, subject to the terms and conditions set forth in the partnership agreement to require the Operating Partnership to redeem all or a portion of the OP Units held by such limited partner or assignee in exchange for cash, or at the Company's sole discretion, in shares of the Company's Class A common stock, on a one-for-one basis determined in accordance with and subject to adjustment under the partnership agreement.
Restricted Stock and Other Awards [Member]
Class of Stock [Line Items]
Granted to issue restricted shares	38,672
Restricted shares and LTIP Issued	Includes 13,253 time-based RSUs issued for 2019 incentive bonuses to certain employees that vested fully on February 14, 2020, the date of grant and 10,171 time-based RSUs granted to certain employees for their election to defer 2020 salary that vest on December 31, 2020. RSUs reflect the right to receive shares of Class A common stock.
Restricted Stock and Other Awards [Member] | Other Employees [Member]
Class of Stock [Line Items]
LTIP Units, description			LTIP units to our officers and employees typically vest over three to eight years. During the quarter ended March 31, 2020, 2,843 LTIPs issued to an employee vested as a result of a modification of the award. In May 2020, pursuant to the Plan, the Company issued 27,365 LTIP Units to the Company's CEO in lieu of his salary payable for the period from the one year anniversary of the IPO to December 31, 2020. LTIP Units issued to the Company's CEO in lieu of cash compensation cliff vest on the eighth anniversary of the date of grant.
IPO [Member]
Class of Stock [Line Items]
Stockholder's Equity shares issued		4,500,000
Stockholder's Equity net proceeds		$ 71,100,000
Stockholder underwriting discount		$ 5,400,000
Common stock voting rights		Each outstanding share of Voting Equivalency stock entitles its holder to 50 votes on all matters on which Class A common stockholders are entitled to vote, including the election of directors, and holders of shares of Class A common stock and Voting Equivalency stock will vote together as a single class. Shares of Voting Equivalency stock are convertible into shares of Class A common stock, on a one-for-one basis, at the election of the holder at any time. Additionally, one share of Voting Equivalency stock will automatically convert into one share of Class A common stock for each 49 OP Units transferred (including by the exercise of redemption rights afforded with respect to OP Units) to a person other than a permitted transferee. This ratio is a function of the fact that each share of Voting Equivalency stock entitles its holder to 50 votes on all matters on which Class A common stockholders are entitled to vote and maintains the voting proportion of holders of Voting Equivalency stock with the holder's economic interest in our Company.
Other expenses		$ 6,400,000
IPO [Member] | Class A [Member]
Class of Stock [Line Items]
Stockholder's Equity shares issued		637,058
IPO [Member] | Class B [Member]
Class of Stock [Line Items]
Stockholder's Equity shares issued		27,206
LTIP Units [Member]
Class of Stock [Line Items]
Amount Per Share	$ 0.17		$ 0.17
Employee Stock Purchase Plan [Member]
Class of Stock [Line Items]
Equity Incentive Plan, description			The Code permits us to provide up to a 15% discount on the lesser of the fair market value of such shares of stock at the beginning of the offering period and the close of the offering period.
Total recognized compensation expense			$ 8,545
Total shares of common stock will be reserved for sale and authorized for issuance	100,000		100,000
Granted to issue restricted shares			3,538

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Related Party Transactions

3 Months Ended

Mar. 31, 2020

Related Party Transactions [Abstract]

Related Party Transactions

Note 9. Related Party Transactions

Management Fee Income

PRM recognized management fee income of $0.3 million for the three months ended March 31, 2020 and the Predecessor recognized management fee income of $0.3 million for the three months ended March 31, 2019 from various properties which were affiliated with Mr. Spodek. These amounts are included in "Fee and other income" on the Company's Consolidated and Combined Consolidated Statements of Operations. Accrued management fees receivable of $0.1 million and $0.08 million as of March 31, 2020 and December 31, 2019, respectively, are included in "Rents and other receivables" on the Company's Consolidated Balance Sheets.

Related Party Lease

On October 1, 2018, the Predecessor entered into a lease for office space in Cedarhurst, New York with an entity affiliated with the Predecessor (the "Office Lease"). Pursuant to the Office Lease, the monthly rent was $15,000 subject to escalations. The term of the Office Lease was five years commencing on October 1, 2018 (with rent commencing on January 1, 2019) and was set to expire on September 30, 2023. In connection with the IPO, the Office Lease was terminated. On May 17, 2019, the Company entered into a new lease for office space in Cedarhurst, New York with an entity affiliated with the Company's CEO (the "New Lease"). Pursuant to the New Lease, the monthly rent is $15,000 subject to escalations. The term of the New Lease is five years commencing on May 17, 2019 and will expire on May 16, 2024. Rental expenses associated with the office lease for the three months ended March 31, 2020 was $47,782 and was recorded in "General and administrative expenses" on the Company's Consolidated and Combined Consolidated Statements of Operations. As of March 31, 2020, $3,096 was outstanding and payable and is included in "Accounts payable, accrued expenses and other."

The following table represents the Company's future rental payments related to the New Lease:

Year Ending December 31,	Amount
2020 – Remaining	$	138,367
2021		188,869
2022		194,535
2023		200,371
2024		76,244
Total	$	798,386

Guarantees

Mr. Spodek, our chief executive officer, has personally guaranteed our loans with First Oklahoma Bank and Vision Bank, totaling $2.8 million. As a guarantor, Mr. Spodek's interests with respect to the debt he is guaranteeing (and the terms of any repayment or default) may not align with our interests and could result in a conflict of interest.

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Intangible Assets and Liabilities

3 Months Ended

Mar. 31, 2020

Intangible Assets and Liabilities [Abstract]

Intangible Assets and Liabilities

Note 5. Intangible Assets and Liabilities

The following table summarizes our intangible assets and liabilities as a result of the application of acquisition accounting:

As of	Gross Asset (Liability)			Accumulated (Amortization)/ Accretion			Net Carrying Amount
March 31, 2020:
In-place lease intangibles	$	16,241,342			(7,580,929	)		8,660,413
Above-market leases		47,768			(21,602	)		26,166
Below-market leases		(10,290,416	)		2,390,563			(7,899,853	)
December 31, 2019:
In-place lease intangibles	$	13,788,024		$	(6,472,157	)	$	7,315,867
Above-market leases		40,620			(18,496	)		22,124
Below-market leases		(8,672,301	)		2,071,182			(6,601,119	)

Amortization of in-place lease intangibles was $1.1 million and $0.2 million for the three months ended March 31, 2020 and 2019, respectively. This amortization is included in "Depreciation and amortization" on the Company's Consolidated and Combined Consolidated Statements of Operations.

Amortization of acquired above market leases was $3,106 and $2,370 for the three months ended March 31, 2020 and 2019, respectively, and is included in "Rental income" on the Company's Consolidated and Combined Consolidated Statements of Operations. Amortization of acquired below market leases was $0.3 million and $0.1 million for the three months ended March 31, 2020 and 2019, respectively, and is included in "Rental income" on the Company's Consolidated and Combined Consolidated Statements of Operations.

Future amortization/accretion of these intangibles is below:

Year Ending December 31,	In-place lease intangibles		Above-market leases		Below-market leases
2020 – Remaining	$	2,803,283	$	9,449	$	(821,831	)
2021		2,813,392		6,695		(993,180	)
2022		1,449,153		5,813		(890,128	)
2023		835,026		3,139		(809,855	)
2024		385,573		1,070		(719,369	)
Thereafter		373,986		—		(3,665,490	)
Total		8,660,413		26,166		(7,899,853	)

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Debt (Details) - USD ($)		3 Months Ended
		Mar. 31, 2020	Dec. 31, 2019
Revolving Credit Facility		$ 68,000,000	$ 54,000,000
Total Principal		71,219,053	57,246,062
Unamortized deferred financing costs		(34,534)	(35,058)
Total Debt		71,184,519	57,211,004
Revolving Credit Facility [Member]
Revolving Credit Facility	[1]	$ 68,000,000	54,000,000
Interest Rate	[1],[2]	2.69%
Interest Rate, description	[1],[2]	LIBOR
Maturity Date	[1]	Sep. 30, 2023
Vision Bank [Member]
Revolving Credit Facility	[3]	$ 1,506,858	1,522,672
Interest Rate	[3]	4.00%
Maturity Date	[3]	Sep. 30, 2036
First Oklahoma Bank [Member]
Revolving Credit Facility	[4]	$ 374,582	378,005
Interest Rate	[4]	4.50%
Maturity Date	[4]	Dec. 31, 2037
Vision Bank - 2018 [Member]
Revolving Credit Facility	[5]	$ 892,613	900,385
Interest Rate	[5]	5.00%
Maturity Date	[5]	Jan. 31, 2038
Seller Financing [Member]
Revolving Credit Facility	[6]	$ 445,000	$ 445,000
Interest Rate	[6]	6.00%
Maturity Date	[6]	Jan. 31, 2025

[1] On September 27, 2019, the Company entered into a credit agreement (as amended, the "Credit Agreement") with People's United Bank, National Association, individually and as administrative agent, BMO Capital Markets Corp., as syndication agent, and certain other lenders. The Credit Agreement provides for revolving commitments in an aggregate principal amount of $100.0 million with an accordion feature ("the Accordion Feature") that permits the Company to borrow up to an additional $100.0 million for an aggregate total of $200.0 million, subject to customary terms and conditions, and a maturity date of September 27, 2023. On January 30, 2020, the Company amended the Credit Agreement in order to exercise a portion of the Accordion Feature to increase the maximum amount available under the Credit Facility to $150.0 million, subject to the borrowing base properties identified therein remaining unencumbered and subject to an enforceable lease. On June 25, 2020, the Company further amended the Credit Agreement to revise, among other items, certain definitions and borrowing base calculations to increase available capacity, as well as the restrictive covenant pertaining to Consolidated Tangible Net Worth (as defined in such amendment). The interest rates applicable to loans under the Credit Facility are, at our option, equal to either a base rate plus a margin ranging from 0.7% to 1.4% per annum or LIBOR plus a margin ranging from 1.7% to 2.4% per annum, each based on a consolidated leverage ratio. In addition, the Company will pay, for the period through and including the calendar quarter ended March 31, 2020, an unused facility fee on the revolving commitments under the Credit Facility of 0.75% per annum for the first $100 million and 0.25% per annum for the portion of revolving commitments exceeding $100.0 million, and for the period thereafter, an unused facility fee of 0.25% per annum for the aggregate unused revolving commitments, with both periods utilizing calculations of daily unused commitments under the Credit Facility. During the three months ended March 31, 2020, the Company incurred $0.2 million of unused fees related to the Credit Facility. The Company's ability to borrow under the Credit Facility is subject to ongoing compliance with a number of customary affirmative and negative covenants. As of March 31, 2020, the Company was in compliance with all of the Credit Facility's debt covenants.

[2] As of March 31, 2020, the one-month LIBOR rate was 0.99%.

[3] Five properties are collateralized under this loan as of March 31, 2020 with Mr. Spodek as the guarantor. On September 8, 2021 and every five years thereafter, the interest rate will reset at a variable annual rate of Wall Street Journal Prime Rate ("Prime") + 0.5%.

[4] The loan is collateralized by first mortgage liens on four properties and a personal guarantee of payment by Mr. Spodek. Interest rate resets on December 31, 2022 to Prime + 0.25%.

[5] The loan is collateralized by first mortgage liens on one property and a personal guarantee of payment by Mr. Spodek. Interest rate resets on January 31, 2023 to Prime + 0.5%.

[6] In connection with the acquisition of a property, we obtained seller financing secured by the property in the amount of $0.4 million requiring five annual payments of principal and interest of $105,661 with the first installment due on January 2, 2021 based on a 6.0% interest rate per annum through January 2, 2025.

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The Company's IPO and Formation Transactions (Details Narrative) - IPO [Member]	1 Months Ended
	May 17, 2019 USD ($) $ / shares shares
The Company's Initial Public Offering and Formation Transactions (Textual)
Sold IPO | shares	4,500,000
Public offering price | $ / shares	$ 17.00
Gross proceeds from initial public offering	$ 76,500,000
Net proceeds of initial public offering	71,100,000
Underwriting discounts	5,400,000
Repayment of outstanding indebtedness	$ 31,700,000
Formation transactions, description	The initial properties and other interests were contributed in exchange for 1,333,112 OP Units, 637,058 shares of Class A common stock, 27,206 shares of Voting Equivalency stock and $1.9 million of cash. In addition, the Operating Partnership purchased 81 post office properties (the "Acquisition Properties") in exchange for $26.9 million in cash, including approximately $1.0 million paid to Mr. Spodek, the Company's chief executive officer and a director for his non-controlling ownership in nine of the Acquisition Properties.
Other expenses	$ 6,400,000

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Real Estate Acquisitions (Details Narrative)	3 Months Ended
	Mar. 31, 2020 USD ($)
Real Estate Acquisitions (Textual)
Acquisition costs	$ 300,000
Acquisition of portfolio acquired, description	The contract purchase price for the portfolio was $13.8 million, exclusive of closing costs, and giving effect to 483,333 OP Units to be issued to the sellers at a value of $17.00 per unit. The closing price of the Company's common stock on January 10, 2020 was $16.39; therefore, total consideration at closing, including closing costs was approximately $13.6 million of which $7.9 million represented the non-cash consideration (the value of the OP Units) issued to the sellers. Includes the acquisition of a 42-building portfolio leased to the USPS. The aggregate purchase price of such portfolio was approximately $8.8 million including closing costs, which was funded with borrowings under our Credit Facility. Includes the acquisition of 20 postal properties in individual or smaller portfolio transactions for approximately $8.1 million including closing costs.
Acquired, Postal Portfolio including closing costs	$ 8,100,000
Acquired, Postal Properties, including closing costs	$ 8,800,000

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Stockholder's Equity (Details 1)	3 Months Ended
	Mar. 31, 2020 $ / shares shares
Outstanding, at beginning of period	268,850
Granted	233,085
Converted to common stock
Vesting of restricted stock
Forfeited	(588)
Outstanding, at end of period	501,347
Weighted Average Grant Date Fair Value
Outstanding, at beginning of period | $ / shares	$ 16.96
Granted | $ / shares	13.72
Converted to common stock | $ / shares
Vesting of restricted stock | $ / shares
Forfeited | $ / shares	17.00
Outstanding, at end of period | $ / shares	$ 15.45
Restricted Shares [Member]
Outstanding, at beginning of period	148,847	[1],[2]
Granted	104,051	[1],[2]
Converted to common stock		[1],[2]
Vesting of restricted stock		[1],[2]
Forfeited	(588)	[1],[2]
Outstanding, at end of period	252,310	[1],[2]
LTIP Units [Member]
Outstanding, at beginning of period	120,003	[3]
Granted	66,938	[3]
Converted to common stock		[3]
Vesting of restricted stock		[3]
Forfeited		[3]
Outstanding, at end of period	186,941	[3]
Restricted Stock Units (RSUs) [Member]
Outstanding, at beginning of period		[4]
Granted	62,096	[4]
Converted to common stock		[4]
Vesting of restricted stock		[4]
Forfeited		[4]
Outstanding, at end of period	62,096	[4]

[1] Represents restricted shares awards included in common stock.

[2] The time-based restricted share awards granted to our officers and employees typically vest in three annual installments or cliff vest at the end of eight years. The time-based restricted share awards granted to our directors' vest over one to three years.

[3] LTIP units to our officers and employees typically vest over three to eight years. During the quarter ended March 31, 2020, 2,843 LTIPs issued to an employee vested as a result of a modification of the award. In May 2020, pursuant to the Plan, the Company issued 27,365 LTIP Units to the Company's CEO in lieu of his salary payable for the period from the one year anniversary of the IPO to December 31, 2020. LTIP Units issued to the Company's CEO in lieu of cash compensation cliff vest on the eighth anniversary of the date of grant.

[4] Includes 38,672 RSUs granted to certain officers of the Company during the three months ended March 31, 2020 subject to the achievement of a service condition and a market condition. Such RSUs are market-based awards and are subject to the achievement of hurdles relating to the Company's absolute total stockholder return and continued employment with the Company over the approximately three-year period from the grant date through December 31, 2022. The number of market-based RSUs is based on the number of shares issuable upon achievement of the market-based metric at target. Also, includes 13,253 time-based RSUs issued for 2019 incentive bonuses to certain employees that vested fully on February 14, 2020, the date of grant and 10,171 time-based RSUs granted to certain employees for their election to defer 2020 salary that vest on December 31, 2020. RSUs reflect the right to receive shares of Class A common stock, subject to the applicable vesting criteria.

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Stockholder's Equity (Details)	3 Months Ended
	Mar. 31, 2020 $ / shares
Amount Per Share	$ 0.17
Dividends [Member]
Declaration Date	Jan. 30, 2020
Record Date	Feb. 14, 2020
Date Paid	Feb. 28, 2020
Amount Per Share	$ 0.17

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Debt (Details Narrative) - USD ($)		3 Months Ended
	Sep. 27, 2019	Mar. 31, 2020	Jan. 30, 2020
First Oklahoma Bank [Member]
Mortgage Loans Payable (Textual)
Debt, description		The loan is collateralized by first mortgage liens on four properties and a personal guarantee of payment by Mr. Spodek. Interest rate resets on December 31, 2022 to Prime + 0.25%.
Vision Bank [Member]
Mortgage Loans Payable (Textual)
Interest rate, description		Five properties are collateralized under this loan as of March 31, 2020 with Mr. Spodek as the guarantor. On September 8, 2021 and every five years thereafter, the interest rate will reset at a variable annual rate of Wall Street Journal Prime Rate ("Prime") + 0.5%.
Vision Bank - 2018 [Member]
Mortgage Loans Payable (Textual)
Debt, description		The loan is collateralized by first mortgage liens on one property and a personal guarantee of payment by Mr. Spodek. Interest rate resets on January 31, 2023 to Prime + 0.5%.
Seller Financing [Member]
Mortgage Loans Payable (Textual)
Payment frequency, description		We obtained seller financing secured by the property in the amount of $0.4 million requiring five annual payments of principal and interest of $105,661 with the first installment due on January 2, 2021 based on a 6.0% interest rate per annum through January 2, 2025.
Revolving Credit Facility [Member]
Mortgage Loans Payable (Textual)
Revolving credit facility	$ 100,000,000
Maximum borrowing facility	$ 200,000,000
Credit facility, maturity	Sep. 27, 2023
Interest rate, description	The interest rates applicable to loans under the Credit Facility are, at our option, equal to either a base rate plus a margin ranging from 0.7% to 1.4% per annum or LIBOR plus a margin ranging from 1.7% to 2.4% per annum, each based on a consolidated leverage ratio. In addition, the Company will pay, for the period through and including the calendar quarter ended March 31, 2020, an unused facility fee on the revolving commitments under the Credit Facility of 0.75% per annum for the first $100 million and 0.25% per annum for the portion of revolving commitments exceeding $100.0 million, and for the period thereafter, an unused facility fee of 0.25% per annum for the aggregate unused revolving commitments, with both periods utilizing calculations of daily unused commitments under the Credit Facility.
Percentage of interest rate		0.99%
Unused facility fee		$ 200,000
Maximum increase in borrowing capacity	$ 100,000,000
Current available borrowing capacity under the credit facility			$ 150,000,000

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Income Taxes (Details Narrative) - USD ($)	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
Unrecognized tax benefits	$ 600,000
Income tax expense	$ 10,197
Predecessor [Member]
Effective tax rate		13.40%
Income tax expense		$ 39,749
Statutory rate		21.00%

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Intangible Assets and Liabilities (Tables)

3 Months Ended

Mar. 31, 2020

Intangible Assets and Liabilities [Abstract]

Schedule of intangible assets and liabilities

As of	Gross Asset (Liability)			Accumulated (Amortization)/ Accretion			Net Carrying Amount
March 31, 2020:
In-place lease intangibles	$	16,241,342			(7,580,929	)		8,660,413
Above-market leases		47,768			(21,602	)		26,166
Below-market leases		(10,290,416	)		2,390,563			(7,899,853	)
December 31, 2019:
In-place lease intangibles	$	13,788,024		$	(6,472,157	)	$	7,315,867
Above-market leases		40,620			(18,496	)		22,124
Below-market leases		(8,672,301	)		2,071,182			(6,601,119	)

Schedule of future amortization

Year Ending December 31,	In-place lease intangibles		Above-market leases		Below-market leases
2020 – Remaining	$	2,803,283	$	9,449	$	(821,831	)
2021		2,813,392		6,695		(993,180	)
2022		1,449,153		5,813		(890,128	)
2023		835,026		3,139		(809,855	)
2024		385,573		1,070		(719,369	)
Thereafter		373,986		—		(3,665,490	)
Total		8,660,413		26,166		(7,899,853	)

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Consolidated Balance Sheets - USD ($)	Mar. 31, 2020	Dec. 31, 2019
Real estate properties
Land	$ 29,971,741	$ 25,147,732
Building and improvements	117,541,035	92,873,637
Tenant improvements	2,850,042	2,562,293
Total real estate properties	150,362,818	120,583,662
Less: Accumulated depreciation	(9,730,056)	(8,813,579)
Total real estate properties, net	140,632,762	111,770,083
Cash	2,844,040	12,475,537
Rent and other receivables	1,741,169	1,710,314
Prepaid expenses and other assets, net	3,734,438	2,752,862
Escrow and reserves	691,766	708,066
Deferred rent receivable	46,052	33,344
In-place lease intangibles, net	8,660,413	7,315,867
Above market leases, net	26,166	22,124
Total Assets	158,376,806	136,788,197
Liabilities:
Secured borrowings, net	3,184,519	3,211,004
Revolving credit facility	68,000,000	54,000,000
Accounts payable, accrued expenses and other	3,220,430	3,152,799
Below market leases, net	7,899,853	6,601,119
Total Liabilities	82,304,802	66,964,922
Equity:
Class A common stock, par value $0.01 per share; 500,000,000 shares authorized, 5,392,906 and 5,285,904 shares issued and outstanding as of March 31, 2020 and December 31, 2019, respectively	53,929	52,859
Class B common stock, par value $0.01 per share; 27,206 shares authorized: 27,206 shares issued and outstanding as of March 31, 2020 and December 31, 2019	272	272
Additional paid-in capital	54,187,591	51,396,226
Accumulated deficit	(4,176,857)	(2,575,754)
Total Stockholders' Equity	50,064,935	48,873,603
Operating Partnership unitholders' non-controlling interests	26,007,069	20,949,672
Total Equity	76,072,004	69,823,275
Total Liabilities and Equity	$ 158,376,806	$ 136,788,197

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Consolidated and Combined Consolidated Statements of Changes in Equity (Unaudited) (Parenthetical)	3 Months Ended
	Mar. 31, 2020 $ / shares
Statement of Stockholders' Equity [Abstract]
Dividends declared per share	$ 0.17

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Subsequent Events

3 Months Ended

Mar. 31, 2020

Subsequent Events [Abstract]

Subsequent Events

Note 13. Subsequent Events

Recently, the outbreak of a novel strain of coronavirus (COVID-19) has adversely impacted global economic activity and contributed to significant declines and volatility in financial markets. The COVID-19 pandemic and associated government responses are creating disruption in, and adversely impacting, many industries. The outbreak could have a continued material adverse impact on economic and market conditions and trigger a period of global economic slowdown. The rapid development and fluidity of this situation precludes any prediction as to the ultimate material adverse impact of COVID-19. Nevertheless, COVID-19 presents uncertainty and risk with respect to the Company and its tenant, which could adversely affect the Company and its financial performance. The Company received all of its April, May and June rents and payments due from holdover tenants and has not received any request for rent concessions as the date of this Quarterly Report. In addition, given the dislocation and government-imposed travel related limitations as a consequence of the pandemic, the Company’s ability to complete acquisitions in the near-term may be delayed.

On April 14, 2020, the Company borrowed an additional $6.0 million under the Credit Facility.

On April 27, 2020, the Board of Directors approved an amendment and restatement of the Alignment of Interest Program of the Company (as amended and restated, the “Alignment of Interest Program”), previously approved by the Board of Directors and in which the Company’s named executive officers and directors of the Company are eligible to participate. Among other amendments, the Alignment of Interest Program was amended to expand the class of participants eligible to be selected to participate in the Alignment of Interest Program by the Corporate Governance and Compensation Committee of the Board of Directors to include any Company employees or other individuals providing services to the Company or its affiliates, provided that they are eligible to participate in the Equity Incentive Plan.

On April 27, 2020, the Board of Directors amended the Equity Incentive Plan, subject to the approval of stockholders. Such amendment solely increases the total number of shares of Class A common stock that may be issued pursuant to awards granted under the Equity Incentive Plan from 541,584 shares to 1,291,584 shares. The remainder of the Equity Incentive Plan remains unchanged.

On April 30, 2020, the Company's Board of Directors approved and the Company declared a first quarter common stock dividend of $0.20 per share which was paid on May 29, 2020 to stockholders of record on May 11, 2020.

On April 30, 2020, the Company closed on the acquisition of a 13-building portfolio leased to the USPS in various states for approximately $7.1 million. In connection with the purchase, the Company obtained $4.5 million of mortgage financing, at a fixed interest rate of 4.25% with interest only for the first 18 months, which resets in November 2026 to the greater of Prime or 4.25%. The financing matures in April 2040. In addition, the Company purchased six postal properties in individual or smaller portfolio transactions for approximately $3.4 million.

In May 2020, the Company determined that it had overdrawn its Credit Facility by approximately $5.1 million. The Company satisfied such amount with a portion of the proceeds from the secured mortgage financing described below.

On May 15, 2020, the Company paid down $0.5 million on the Credit Facility.

On May 28, 2020, the Company completed the separation of deed and transfer of the real property attributable to a de minimis non-postal tenant that shares space in a building leased to the USPS. At the time of the IPO a property located in Milwaukee, WI, a portion of which is leased to the USPS, was contributed to the Company. It was intended that the non-postal portion of the property would revert back to an entity affiliated with Mr. Spodek once a separation of the deed was completed. The portion of the property leased to the USPS remains owned by a wholly owned subsidiary of the Operating Partnership. The independent members of our Board of Directors ratified the no consideration transfer.

On June 8, 2020, the Company obtained $9.2 million of mortgage financing at a fixed interest rate of 4.25% with interest only payable for the first 18 months, which resets in January 2027 to the greater of Prime or 4.25%. The financing matures in June 2040.

On June 8, 2020, the Company paid down $6.0 million on the Credit Facility.

On June 25, 2020, the Company amended the Credit Agreement to revise, among other items, certain definitions and borrowing base calculations to increase available capacity, as well as the restrictive covenant pertaining to Consolidated Tangible Net Worth (as defined in such amendment).

As of June 25, 2020, the Company had entered into a definitive agreement to acquire one postal property leased to the USPS for approximately $1.7 million. Formal due diligence has been completed and the transaction is expected to close during the third quarter of 2020, subject to the satisfaction of customary closing conditions. 

Current Lease Renewal and Revised USPS Lease Form

As of June 25, 2020, the leases at 43 of our properties (consisting of 20 properties for which leases expired in 2019, including one lease that expired as of the date of our acquisition, and 23 properties for which leases expired in 2020) had expired and the USPS is occupying such properties as a holdover tenant, aggregating $1.9 million in annualized rental income. To date, the USPS has not vacated or notified us of its intention to vacate any of these 43 properties. The Company has received all holdover rent on a month to month basis, with the USPS paying the greater of market rent or the rent amount under the expired lease.

The USPS has adopted a revised form of our modified double-net lease, which transfers the responsibility for additional maintenance expenses and obligations to the landlord, including some components of plumbing and electrical systems. To date, we have not renewed or entered into revised leases for any of our leases with the USPS that expired in 2019 or 2020.

As of June 25, 2020, we have not entered into any definitive documentation with respect to any addendum to the revised form of our modified double-net lease, rental rates or leases for the 43 properties at which the USPS is a holdover tenant, and there can be no guarantee that any new leases that we enter into with the USPS will reflect our expectations with respect to terms or timing.

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Earnings Per Share (Tables)

3 Months Ended

Mar. 31, 2020

Earnings Per Share [Abstract]

Schedule of weighted average shares basic and dilutive earnings per share

	For the Three Months Ended March 31, 2020
Numerator for earnings per share – basic and diluted:
Net loss attributable to common stockholders	$	(677,755	)
Less: Income attributable to participating securities		(71,535	)
Numerator for earnings per share — basic and diluted	$	(749,290	)
Denominator for earnings per share – basic and diluted		5,174,569
Basic and diluted earnings per share	$	(0.14	)

Explanatory Note:

(1) The combined statements of operations prior to May 17, 2019 represents the activity of the Predecessor and EPS was not applicable.

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Summary of Significant Accounting Policies (Details Narrative) - USD ($)	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019	Dec. 31, 2019
Summary of Significant Accounting Policies (Textual)
Potentially dilutive shares outstanding	2,827,737
Secured borrowings	$ 3,300,000		$ 3,200,000
Principal balance	$ 3,200,000		$ 3,200,000
Concentration of credit risks, description	For the three months ended March 31, 2020, no state had a concentration of rental income over 10% as a percentage of total rental income.	For the three months ended March 31, 2019, our total rental income of $1.5 million was concentrated in the following states: Texas (13.8%), Massachusetts (13.4%), Wisconsin (12.3%) and Ohio (10.4%).

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Intangible Assets and Liabilities (Details 1) - USD ($)	Mar. 31, 2020	Dec. 31, 2019
Total	$ 8,660,413	$ 7,315,867
In-place lease intangibles [Member]
2020 - Remaining	2,803,283
2021	2,813,392
2022	1,449,153
2023	835,026
2024	385,573
Thereafter	373,986
Total	8,660,413
Above-market leases [Member]
2020 - Remaining	9,449
2021	6,695
2022	5,813
2023	3,139
2024	1,070
Thereafter
Total	26,166
Below-market leases [Member]
2020 - Remaining	(821,831)
2021	(993,180)
2022	(890,128)
2023	(809,855)
2024	(719,369)
Thereafter	(3,665,490)
Total	$ (7,899,853)

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Stockholder's Equity

3 Months Ended

Mar. 31, 2020

Equity [Abstract]

Stockholder's Equity

Note 11. Stockholder's Equity

The Company issued 4,500,000 shares of Class A common stock in conjunction with the IPO resulting in net proceeds of approximately $71.1 million after deducting approximately $5.4 million in underwriting discounts and before giving effect to $6.4 million in other expenses relating to the IPO. In addition, the Company issued 637,058 shares of Class A common stock and 27,206 shares of Voting Equivalency stock in connection with the Formation Transactions. Each outstanding share of Voting Equivalency stock entitles its holder to 50 votes on all matters on which Class A common stockholders are entitled to vote, including the election of directors, and holders of shares of Class A common stock and Voting Equivalency stock will vote together as a single class. Shares of Voting Equivalency stock are convertible into shares of Class A common stock, on a one-for-one basis, at the election of the holder at any time. Additionally, one share of Voting Equivalency stock will automatically convert into one share of Class A common stock for each 49 OP Units transferred (including by the exercise of redemption rights afforded with respect to OP Units) to a person other than a permitted transferee. This ratio is a function of the fact that each share of Voting Equivalency stock entitles its holder to 50 votes on all matters on which Class A common stockholders are entitled to vote and maintains the voting proportion of holders of Voting Equivalency stock with the holder's economic interest in our Company.

Dividends

During the three months ended March 31, 2020, the Board approved and the Company declared and paid dividends of $1.4 million to Class A common stockholders, Voting Equivalency stockholders, OP unitholders and LTIP unitholders, or $0.17 per share as shown in the table below.

Declaration Date	Record Date	Date Paid	Amount Per Share
January 30, 2020	February 14, 2020	February 28, 2020	$	0.17

Non-controlling Interests

Non-controlling interests in the Company represent OP Units held by the Predecessor's prior investors and certain sellers of properties to the Company and LTIP Units primarily issued to the Company's CEO in connection with the IPO and in lieu of cash compensation. The Company issued 483,333 OP Units in connection with a portfolio that the Company acquired, 53,230 LTIP Units to the Company's CEO for his 2019 incentive bonus and 13,708 LTIP Units to the Company's CEO during the three months ended March 31, 2020. As of March 31, 2020, and December 31, 2019, non-controlling interests consisted of 2,640,795 OP Units and 186,942 LTIP Units and 2,157,462 OP Units and 120,004 LTIP Units, respectively. This represented approximately 34.2% and 30.0% of the outstanding Operating Partnership units as of March 31, 2020 and December 31, 2019, respectively. Operating Partnership units and shares of common stock have essentially the same economic characteristics, as they share equally in the total net income or loss distributions of the Operating Partnership. Beginning on or after the date which is 12 months after the later of (i) the completion of the IPO or (ii) the date on which a person first became a holder of common units, each limited partner and assignees of limited partners will have the right, subject to the terms and conditions set forth in the partnership agreement to require the Operating Partnership to redeem all or a portion of the OP Units held by such limited partner or assignee in exchange for cash, or at the Company's sole discretion, in shares of the Company's Class A common stock, on a one-for-one basis determined in accordance with and subject to adjustment under the partnership agreement.

The Operating Partnership unitholders are entitled to share in cash distributions from the Operating Partnership in proportion to their percentage ownership of OP Units.

Restricted Stock and Other Awards

Pursuant to the Company's 2019 Equity Incentive Plan (the "Equity Incentive Plan" or the "Plan"), the Company may grant equity incentive awards to its directors, officers, employees and consultants. The maximum number of shares of Class A Common Stock that were authorized for issuance under the plan were 541,584. As of March 31, 2020, the remaining shares available under the Plan for future issuance was 40,237. The Plan provides for grants of stock options, stock awards, stock appreciation rights, performance units, incentive awards, other equity-based awards (including LTIP units) and dividend equivalents in connection with the grant of performance units and other equity-based awards.

The following table presents a summary of restricted stock, LTIP Units and RSUs. The balance as of March 31, 2020 represents unvested shares of restricted stock and LTIP Units and RSUs that are outstanding, whether vested or not:

	Restricted Shares (1)(2)			LTIP Units (3)		Restricted Stock Units ("RSUs") (4)		Total Shares			Weighted Average Grant Date Fair Value
Outstanding, at beginning of period		148,847			120,003		—		268,850		$	16.96
Granted		104,051			66,938		62,096		233,085		$	13.72
Converted to common stock		—			—		—		—			—
Vesting of restricted stock		—			—		—		—			—
Forfeited		(588	)		—		—		(588	)	$	17.00
Outstanding, at end of period		252,310			186,941		62,096		501,347		$	15.45

Explanatory Notes:

(1) Represents restricted shares awards included in common stock.

(2) The time-based restricted share awards granted to our officers and employees typically vest in three annual installments or cliff vest at the end of eight years. The time-based restricted share awards granted to our directors' vest over one to three years.

(3) LTIP units to our officers and employees typically vest over three to eight years. During the quarter ended March 31, 2020, 2,843 LTIPs issued to an employee vested as a result of a modification of the award. In May 2020, pursuant to the Plan, the Company issued 27,365 LTIP Units to the Company's CEO in lieu of his salary payable for the period from the one year anniversary of the IPO to December 31, 2020. LTIP Units issued to the Company's CEO in lieu of cash compensation cliff vest on the eighth anniversary of the date of grant.

(4) Includes 38,672 RSUs granted to certain officers of the Company during the three months ended March 31, 2020 subject to the achievement of a service condition and a market condition. Such RSUs are market-based awards and are subject to the achievement of hurdles relating to the Company's absolute total stockholder return and continued employment with the Company over the approximately three-year period from the grant date through December 31, 2022. The number of market-based RSUs is based on the number of shares issuable upon achievement of the market-based metric at target. Also, includes 13,253 time-based RSUs issued for 2019 incentive bonuses to certain employees that vested fully on February 14, 2020, the date of grant and 10,171 time-based RSUs granted to certain employees for their election to defer 2020 salary that vest on December 31, 2020. RSUs reflect the right to receive shares of Class A common stock, subject to the applicable vesting criteria.

During the three months ended March 31, 2020, the Company recognized compensation expense of $0.7 million related to all awards which is recorded in "General and administrative" on the Company's Consolidated and Combined Consolidated Statements of Operations.

As of March 31, 2020, there was $6.1 million of total unrecognized compensation cost related to unvested awards, which is expected to be recognized over a weighted average period of 3.65 years.

Employee Stock Purchase Plan

In connection with the IPO, the Company established the Postal Realty Trust, Inc. 2019 Qualified Employee Stock Purchase Plan ("ESPP"), which allows the Company's employees to purchase shares of the Company's Class A common stock at a discount. A total of 100,000 shares of Class A common stock will be reserved for sale and authorized for issuance under the ESPP. The Code permits us to provide up to a 15% discount on the lesser of the fair market value of such shares of stock at the beginning of the offering period and the close of the offering period. As of March 31, 2020, 3,538 shares have been issued under the ESPP since commencement. During the three months ended March 31, 2020, the Company recognized compensation expense of $8,545 which is recorded in "General and administrative" on the Company's Consolidated and Combined Consolidated Statements of Operations.

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Leases

3 Months Ended

Mar. 31, 2020

Leases, Operating [Abstract]

Leases

Note 7. Leases

As of March 31, 2020, all of the properties owned by the Company were occupied by a single tenant, the USPS, other than a de minimis non-postal tenant that shares space in a building leased to the USPS. Certain leases have expired and the balance expire at various dates through November 30, 2029.

Future minimum lease payments to be received as of March 31, 2020 under non-cancellable operating leases for the next five years and thereafter are as follows: ⁽¹⁾

Year Ending December 31,	Amount
2020 – Remaining(2)	$	9,531,480
2021		11,600,963
2022		8,553,461
2023		6,471,524
2024		4,329,108
Thereafter		5,248,174
Total	$	45,734,710

Explanatory Notes:

(1) The above minimum lease payments to be received do not include reimbursements from the USPS for real estate taxes.

(2) As of March 31, 2020, the leases at 31 of our properties had expired and the USPS was occupying such properties as a holdover tenant. In addition, the lease at one of our properties is a month to month lease.

During the three months ended March 31, 2020, the Company assumed an operating ground lease at one of our properties which includes rent escalations throughout the lease term (including renewal options) and expires on September 30, 2059. Ground lease expense is included in "Property Operating Expenses" on the Company's Consolidated and Combined Consolidated Statements of Operations.

Year Ending December 31,	Amount
2020 – Remaining	$	16,805
2021		22,400
2022		22,400
2023		22,400
2024		22,960
Thereafter		1,159,690
Total	$	1,266,655

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Summary of Significant Accounting Policies

3 Months Ended

Mar. 31, 2020

Accounting Policies [Abstract]

Summary of Significant Accounting Policies

Note 3. Summary of Significant Accounting Policies

Basis of Presentation

The accompanying unaudited Consolidated and Combined Consolidated Financial Statements include the financial position and results of operations of the Company and its Predecessor, the Operating Partnership and its wholly owned subsidiaries. The Company did not have any operations from the date of formation to May 17, 2019. The Predecessor represents a combination of certain entities holding interests in real estate that were commonly controlled prior to the Formation Transactions. Due to their common control, the financial statements of the separate Predecessor entities which owned the properties and the management company are presented on a combined consolidated basis. The effects of all significant intercompany balances and transactions have been eliminated.

The Company consolidates the Operating Partnership, a VIE in which the Company is considered the primary beneficiary. The primary beneficiary is the entity that has (i) the power to direct the activities that most significantly impact the entity's economic performance and (ii) the obligation to absorb losses of the VIE or the right to receive benefits from the VIE that could be significant to the VIE.

A non-controlling interest is defined as the portion of the equity in an entity not attributable, directly or indirectly, to the Company. Non-controlling interests are required to be presented as a separate component of equity in the Consolidated Balance Sheets. Accordingly, the presentation of net income (loss) reflects the income attributed to controlling and non-controlling interests.

The accompanying consolidated and combined consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States ("GAAP") for interim financial information and with the instructions to Form 10-Q and Article 8 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements.

This interim financial information should be read in conjunction with the consolidated and combined consolidated financial statements included in the Company's Annual Report on Form 10-K for the year ended December 31, 2019. Management believes that all adjustments of a normal, recurring nature considered necessary for a fair presentation have been included. This interim financial information does not necessarily represent or indicate what the operating results will be for the year ending December 31, 2020. All material intercompany accounts and transactions have been eliminated.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities and the reported amounts of revenues and expenses during the reporting period. Although management believes its estimates are reasonable, actual results could differ from those estimates.

Cash and Escrows and Reserves

Cash included unrestricted cash with a maturity of three months or less. Escrows and reserves consisted of restricted cash. The following table provides a reconciliation of cash and escrows and reserves reported within the Company's Consolidated Balance Sheets and Consolidated and Combined Consolidated Statements of Cash Flows:

	As of
	March 31, 2020		December 31, 2019
Cash	$	2,844,040	$	12,475,537
Escrows and reserves:
Maintenance reserve		664,165		663,339
ESPP reserve		27,601		44,727
Cash and escrows and reserves	$	3,535,806	$	13,183,603

Fair Value of Financial Instruments

The following disclosure of estimated fair value was determined by management using available market information and appropriate valuation methodologies. However, considerable judgment is necessary to interpret market data and develop estimated fair value. Accordingly, the estimates presented herein are not necessarily indicative of the amounts the Company could realize on disposition of the assets and liabilities as of March 31, 2020 and December 31, 2019. The use of different market assumptions and/or estimation methodologies may have a material effect on the estimated fair value amounts. Cash, escrows and reserves, receivables, prepaid expenses, accounts payable and accrued expenses are carried at amounts which reasonably approximate their fair values as of March 31, 2020 and December 31, 2019 due to their short maturities.

The fair value of the Company's borrowings under its Credit Facility approximates carrying value. The fair value of the Company's secured borrowings aggregated approximately $3.3 million and $3.2 million as compared to the principal balance of $3.2 million and $3.2 million as of March 31, 2020 and December 31, 2019, respectively. The fair value of the Company's debt was categorized as a Level 3 basis (as provided by ASC 820, Fair Value Measurements and Disclosures). The fair value of these financial instruments was determined by using a discounted cash flow analysis based on the borrowing rates currently available to the Company for loans with similar terms and maturities. The fair value of the mortgage debt was determined by discounting the future contractual interest and principal payments by a market rate.   

Disclosure about fair value of assets and liabilities is based on pertinent information available to management as of March 31, 2020 and December 31, 2019. Although management is not aware of any factors that would significantly affect the fair value amounts, such amounts have not been comprehensively revalued for purposes of these financial statements since March 31, 2020 and current estimates of fair value may differ significantly from the amounts presented herein.

Impairment 

The carrying value of real estate investments and related intangible assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment exists when the carrying amount of an asset exceeds the aggregate projected future cash flows over the anticipated holding period on an undiscounted basis. An impairment loss is measured based on the excess of the asset's carrying amount over its estimated fair value. Impairment analyses will be based on current plans, intended holding periods and available market information at the time the analyses are prepared. If estimates of the projected future cash flows, anticipated holding periods or market conditions change, the evaluation of impairment losses may be different and such differences may be material. The evaluation of anticipated cash flows is subjective and is based, in part, on assumptions regarding future occupancy, rental rates and capital requirements that could differ materially from actual results. No impairments were recorded during the three months ended March 31, 2020 and 2019. 

Concentration of Credit Risks 

As of March 31, 2020, the Company's properties were leased to a single tenant, the USPS, other than a de minimis non-postal tenant that shares space in a building leased to the USPS. For the three months ended March 31, 2020, no state had a concentration of rental income over 10% as a percentage of total rental income. For the three months ended March 31, 2019, our total rental income of $1.5 million was concentrated in the following states: Texas (13.8%), Massachusetts (13.4%), Wisconsin (12.3%) and Ohio (10.4%). The ability of the USPS to honor the terms of their leases is dependent upon regulatory, economic, environmental or competitive conditions in any of these areas and could have an effect on our overall business results. 

The Company has deposited cash and maintains its bank deposits with large financial institutions in amounts that exceed federally insured limits. The Company has not experienced any losses in such accounts. 

Equity Based Compensation 

The Company accounts for equity-based compensation in accordance with ASC Topic 718 Compensation – Stock Compensation, which requires the Company to recognize an expense for the grant date fair value of equity-based awards. Equity-classified stock awards granted to employees and non-employees that have a service condition and/or a market condition are measured at fair value at date of grant and remeasured at fair value only upon a modification of the award. The Company will record forfeitures as they occur. 

The Company recognizes compensation expense on a straight-line basis over the requisite service period of each award, with the amount of compensation expense recognized at the end of a reporting period at least equal the portion of fair value of the respective award at grant date or modification date, as applicable, that has vested through that date. For awards with a market condition, compensation cost is not reversed if a market condition is not met so long as the requisite service has been rendered, as a market condition does not represent a vesting condition. 

See Note 11. Stockholder's Equity for further details. 

Earnings per Share 

The Company calculates net loss per share based upon the weighted average shares outstanding less issued and outstanding non-vested shares of Class A common stock for the period beginning May 17, 2019. Diluted earnings per share is calculated after giving effect to all potential dilutive shares outstanding during the period. There were 2,827,737 potentially dilutive shares outstanding related to the issuance of OP Units and LTIP Units held by non-controlling interests as of March 31, 2020.

Future Application of Accounting Standards

In February 2016, the FASB issued ASU 2016-02, Leases; in July 2018, the FASB issued ASU 2018-10, Codification Improvements to Topic 842, Leases, and ASU 2018-11, Leases — Targeted Improvements; and in December 2018, the FASB issued ASU 2018-20, Narrow-Scope Improvements for Lessors. This group of ASUs is collectively referred to as Topic 842. Topic 842 supersedes the existing standards for lease accounting (Topic 840, Leases). Topic 842 will be effective for the Company on January 1, 2021 as a result of its classification as an emerging growth company.

The Company expects to elect the practical expedients provided by Topic 842, including: the package of practical expedients that allows an entity not to reassess upon adoption (i) whether an expired or existing contract contains a lease, (ii) whether a lease classification related to expired or existing lease arrangements, and (iii) whether costs incurred on expired or existing leases qualify as initial direct costs, and as a lessor, the practical expedient not to separate certain non-lease components, such as common area maintenance, from the lease component if the timing and pattern of transfer are the same for the non-lease component and associated lease component, and the lease component would be classified as an operating lease if accounted for separately.

Topic 842 requires lessees to record most leases on their balance sheet through a right-of-use ("ROU") model, in which a lessee records an ROU asset and a lease liability on their balance sheet. Leases that are less than 12 months do not need to be accounted for under the ROU model. Lessees will account for leases as financing or operating leases, with the classification affecting the timing and pattern of expense recognition in the income statement. Lease expense will be recognized based on the effective interest method for leases accounted for as finance leases and on a straight-line basis over the term of the lease for leases accounted for as operating leases. As of March 31, 2020, the Company was the lessee under one office lease and one ground lease that would require accounting under the ROU model.

The accounting by a lessor under Topic 842 is largely unchanged from that of Topic 840. Under Topic 842, lessors will continue to account for leases as a sales-type, direct-financing, or operating. A lease will be treated as a sale if it is considered to transfer control of the underlying asset to the lessee. A lease will be classified as direct-financing if risks and rewards are conveyed without the transfer of control. Otherwise, the lease is treated as an operating lease. Topic 842 requires accounting for a transaction as a financing in a sale leaseback in certain circumstances, including when the seller-lessee is provided an option to purchase the property from the landlord at the tenant's option. The Company expects that this provision could change the accounting for these types of leases in the future. Topic 842 also includes the concept of separating lease and non-lease components. Under Topic 842, non-lease components, such as common area maintenance, would be accounted for under Topic 606 and separated from the lease payments. However, the Company will elect the lessor practical expedient allowing the Company to not separate these components when certain conditions are met. Upon adoption of Topic 842, the Company expects to combine tenant reimbursements with rental income on its consolidated statements of operations.

In September 2016, the FASB issued ASU No. 2016-13, Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments and in November 2018 issued ASU No. 2018-19, Codification Improvements to Topic 326, Financial Instruments - Credit Losses. The guidance changes how entities will measure credit losses for most financial assets and certain other instruments that are not measured at fair value through net income. The guidance replaces the current 'incurred loss' model with an 'expected loss' approach. The Company will also be required to disclose information about how it developed the allowances, including changes in the factors that influenced the Company's estimate of expected credit losses and the reasons for those changes. ASU No. 2018-19 excludes operating lease receivables from the scope of this guidance. This guidance will be effective for the Company on January 1, 2023 as a result of its classification as an emerging growth company. The Company is currently in the process of evaluating the impact the adoption of the guidance will have on its consolidated financial statements.

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Subsequent Events (Details Narrative) - Subsequent Event [Member]			1 Months Ended
	Jun. 08, 2020 USD ($)	May 15, 2020 USD ($)	Jun. 25, 2020 USD ($) properties	Apr. 30, 2020 USD ($) properties $ / shares	Apr. 27, 2020	May 31, 2020 USD ($)	Apr. 14, 2020 USD ($)
Subsequent Event [Line Items]
Current lease renewal and revised USPS lease form, description			The leases at 43 of our properties (consisting of 20 properties for which leases expired in 2019, including one lease that expired as of the date of our acquisition, and 23 properties for which leases expired in 2020) had expired and the USPS is occupying such properties as a holdover tenant, aggregating $1.9 million in annualized rental income. To date, the USPS has not vacated or notified us of its intention to vacate any of these 43 properties. The Company has received all holdover rent on a month to month basis, with the USPS paying the greater of market rent or the rent amount under the expired lease.
Acquisition of properties, description			The Company had entered into a definitive agreement to acquire one postal property leased to the USPS for approximately $1.7 million. Formal due diligence has been completed and the transaction is expected to close during the third quarter of 2020, subject to the satisfaction of customary closing conditions.	The Company closed on the acquisition of a 13-building portfolio leased to the USPS in various states for approximately $7.1 million. In connection with the purchase, the Company obtained $4.5 million of mortgage financing, at a fixed interest rate of 4.25% with interest only for the first 18 months, which resets in November 2026 to the greater of Prime or 4.25%. The financing matures in April 2040. In addition, the Company purchased six postal properties in individual or smaller portfolio transactions for approximately $3.4 million.
Equity incentive plan, description					The Board of Directors amended the Equity Incentive Plan, subject to the approval of stockholders. Such amendment solely increases the total number of shares of Class A common stock that may be issued pursuant to awards granted under the Equity Incentive Plan from 541,584 shares to 1,291,584 shares
Number of properties acquired or to be acquired			1
Borrowed an additional | $							$ 6,000,000
Amount of credit facility satisfied | $						$ 5,100,000
Mortgage financing, description	The Company obtained $9.2 million of mortgage financing at a fixed interest rate of 4.25% with interest only payable for the first 18 months, which resets in January 2027 to the greater of Prime or 4.25%. The financing matures in June 2040.
Common stock dividend per share | $ / shares				$ 0.20
Common stock dividend paid				May 29, 2020
Common stock dividend record				May 11, 2020
Subsequent acquisitions costs | $			$ 1,700,000	$ 3,400,000
Number of lease properties currently in holdover			43
Number of lease properties in holdover that expired in 2019			20
Number of lease properties in holdover that expired in 2020			23
Number of properties closed in portfolio			6	13
Repayment of debt | $	$ 6,000,000	$ 500,000

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Leases (Details 1)	Mar. 31, 2020 USD ($)
Ground Lease [Abstract]
2020 - Remaining	$ 16,805
2021	22,400
2022	22,400
2023	22,400
2024	22,960
Thereafter	1,159,690
Total	$ 1,266,655

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Related Party Transactions (Details Narrative) - USD ($)		3 Months Ended
	Oct. 01, 2018	Mar. 31, 2020	Mar. 31, 2019	Dec. 31, 2019
Related Party Transactions (Line Items)
Guarantees, description		Mr. Spodek, our chief executive officer, has personally guaranteed our loans with First Oklahoma Bank and Vision Bank, totaling $2.8 million. As a guarantor, Mr. Spodek's interests with respect to the debt he is guaranteeing (and the terms of any repayment or default) may not align with our interests and could result in a conflict of interest.
Postal Realty Management [Member]
Related Party Transactions (Line Items)
Management fee income		$ 300,000
Accrued management fees receivable		100,000
Predecessor [Member]
Related Party Transactions (Line Items)
Management fee income			$ 300,000
Accrued management fees receivable				$ 80,000
Office Lease 2 [Member]
Related Party Transactions (Line Items)
Outstanding and payable		$ 3,096
Lease agreement entered date		May 17, 2019
Monthly rent amount		$ 15,000
Rental expenses		$ 47,782
Lease term		5 years
Lease expire date		May 16, 2024
Office Lease 1 [Member] | Predecessor [Member]
Related Party Transactions (Line Items)
Monthly rent amount	$ 15,000
Lease term	5 years
Lease expire date	Sep. 30, 2023

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Leases (Tables)

3 Months Ended

Mar. 31, 2020

Leases, Operating [Abstract]

Schedule of future minimum rental income

Year Ending December 31,	Amount
2020 – Remaining(2)	$	9,531,480
2021		11,600,963
2022		8,553,461
2023		6,471,524
2024		4,329,108
Thereafter		5,248,174
Total	$	45,734,710

Schedule of future ground lease lease

Ground lease expense is included in "Property Operating Expenses" on the Company's Consolidated and Combined Consolidated Statements of Operations.

Year Ending December 31,	Amount
2020 – Remaining	$	16,805
2021		22,400
2022		22,400
2023		22,400
2024		22,960
Thereafter		1,159,690
Total	$	1,266,655

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Consolidated and Combined Consolidated Statements of Operations (Unaudited) - USD ($)		3 Months Ended
		Mar. 31, 2020	Mar. 31, 2019
Revenues:
Rental income		$ 4,300,771
Tenant reimbursements		601,346
Fee and other income		295,519
Total revenues		5,197,636
Operating expenses:
Real estate taxes		641,944
Property operating expenses		407,048
General and administrative		2,301,543
Depreciation and amortization		2,034,868
Total operating expenses		5,385,403
(Loss) income from operations		(187,767)
Interest expense, net:
Contractual interest expense		(728,226)
Write-off and amortization of deferred financing fees		(104,462)
Interest income		826
Total interest expense, net		(831,862)
(Loss) income before income tax (expense) benefit		(1,019,629)
Income tax expense		(10,197)
Net (loss) income		(1,029,826)
Net income attributable to non-controlling interest in properties
Net income attributable to Predecessor
Net loss attributable to Operating Partnership unitholders' non-controlling interests		352,071
Net (loss) attributable to common stockholders		$ (677,755)
Net (loss) per share:
Basic and Diluted		$ (0.14)
Weighted average common shares outstanding:
Basic and Diluted	[1]	5,174,569
Predecessor [Member]
Revenues:
Rental income			$ 1,492,386
Tenant reimbursements			236,856
Fee and other income			286,926
Total revenues			2,016,168
Operating expenses:
Real estate taxes			249,789
Property operating expenses			251,706
General and administrative			376,891
Depreciation and amortization			480,443
Total operating expenses			1,358,829
(Loss) income from operations			657,339
Interest expense, net:
Contractual interest expense			(358,467)
Write-off and amortization of deferred financing fees			(3,181)
Interest income			1,134
Total interest expense, net			(360,514)
(Loss) income before income tax (expense) benefit			296,825
Income tax expense			(39,749)
Net (loss) income			257,076
Net income attributable to non-controlling interest in properties			(2,843)
Net income attributable to Predecessor			$ 254,233

[1] The combined statements of operations prior to May 17, 2019 represents the activity of the Predecessor and EPS was not applicable.

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Summary of Significant Accounting Policies (Tables)

3 Months Ended

Mar. 31, 2020

Summary Of Significant Accounting Policies

Schedule of cash and escrows and reserves

	As of
	March 31, 2020		December 31, 2019
Cash	$	2,844,040	$	12,475,537
Escrows and reserves:
Maintenance reserve		664,165		663,339
ESPP reserve		27,601		44,727
Cash and escrows and reserves	$	3,535,806	$	13,183,603

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Organization and Description of Business

3 Months Ended

Mar. 31, 2020

Organization and Description of Business [Abstract]

Organization and Description of Business

Note 1. Organization and Description of Business

Postal Realty Trust, Inc. (the "Company" "we", "us", or "our") was organized in the state of Maryland on November 19, 2018. On May 17, 2019, the Company completed its initial public offering ("IPO") of the Company's Class A common stock, par value $0.01 per share (our "Class A common stock"). The Company contributed the net proceeds from the IPO to Postal Realty LP, a Delaware limited partnership (the "Operating Partnership"), in exchange for common units of limited partnership interest in the Operating Partnership (each, an "OP Unit," and collectively, the "OP Units"). Both the Company and the Operating Partnership commenced operations upon completion of the IPO and certain related formation transactions (the "Formation Transactions"). Prior to the completion of the IPO and the Formation Transactions, the Company had no operations.

The Company's interest in the Operating Partnership entitles the Company to share in distributions from, and allocations of profits and losses of, the Operating Partnership in proportion to the Company's percentage ownership of OP Units. As the sole general partner of the Operating Partnership, the Company has the exclusive power under the partnership agreement to manage and conduct the Operating Partnership's business, subject to limited approval and voting rights of the limited partners. As of March 31, 2020, the Company held an approximately 65.8% interest in the Operating Partnership. As the sole general partner and the majority interest holder, the Company consolidates the financial position and results of operations of the Operating Partnership. The Operating Partnership is considered a variable interest entity ("VIE") in which we are the primary beneficiary.

Our Predecessor (the "Predecessor") is a combination of limited liability companies (the "LLCs"), one C-Corporation ("UPH"), one S-Corporation ("NPM") and one limited partnership. The entities that comprise the Predecessor were majority owned and controlled by Mr. Andrew Spodek and his affiliates and were acquired by contribution to, or merger with, the Company and the Operating Partnership.

The Predecessor does not represent a legal entity. The Predecessor and its related assets and liabilities were under common control and were contributed to the Operating Partnership in connection with the Company's IPO.

For the periods prior to May 17, 2019, the Predecessor, through the LLCs, UPH and the limited partnership, owned 190 post office properties in 33 states.

NPM was formed on November 17, 2004, for the purpose of managing commercial real estate properties.

As of March 31, 2020, the Company owned a portfolio of 549 postal properties located in 45 states. Our properties were leased to a single tenant, the United States Postal Service (the "USPS"), other than a de minimis non-postal tenant that shares space in a building leased to the USPS.

In addition, through its taxable REIT subsidiary ("TRS"), Postal Realty Management TRS, LLC ("PRM"), the Company provides fee-based third party property management services for an additional 401 postal properties, which are owned by Mr. Spodek and his affiliates, his family members and their partners.

The Company, until May 15, 2019, was authorized to issue up to 600,000,000 shares of common stock, par value $0.01 per share. On May 15, 2019, in connection with the IPO, the Company amended its articles of incorporation such that the Company is currently authorized to issue up to 500,000,000 shares of Class A common stock, 27,206 shares of Class B common stock, $0.01 par value per share (our "Class B common stock" or "Voting Equivalency stock"), and up to 100,000,000 shares of preferred stock.

The Company believes it has been organized in conformity with, and has operated in a manner that has enabled it to meet, the requirements or qualification as a real estate investment trust ("REIT") under the Code, and will elect to be taxed as a REIT under the Code beginning with its short taxable year ended December 31, 2019 upon the filing of its federal income tax return for such year. As a REIT, the Company generally will not be subject to federal income tax to the extent that it distributes its REIT taxable income for each tax year to its stockholders. REITs are subject to a number of organizational and operational requirements.

Pursuant to the Jumpstart Our Business Startups Act (the "JOBS Act"), the Company qualifies as an emerging growth company ("EGC"). An EGC may choose, as we have done, to take advantage of the extended private company transition period provided for complying with new or revised accounting standards that may be issued by the Financial Accounting Standards Board ("FASB") or the Securities and Exchange Commission (the "SEC").

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Leases (Details)	Mar. 31, 2020 USD ($)
Leases, Operating [Abstract]
2020 - Remaining	$ 9,531,480	[1],[2]
2021	11,600,963
2022	8,553,461
2023	6,471,524
2024	4,329,108
Thereafter	5,248,174
Total	$ 45,734,710	[2]

[1] As of March 31, 2020, the leases at 30 of our properties had expired and the USPS was occupying such properties as a holdover tenant. In addition, the lease at one of our properties is a month to month lease.

[2] The above minimum lease payments to be received do not include reimbursements from the USPS for real estate taxes.

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Related Party Transactions (Details)	Mar. 31, 2020 USD ($)
Related Party Transactions [Abstract]
2020 - Remaining	$ 138,367
2021	188,869
2022	194,535
2023	200,371
2024	76,244
Total	$ 798,386

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The Company's IPO and Formation Transactions

3 Months Ended

Mar. 31, 2020

The Company's Initial Public Offering and Formation Transactions [Abstract]

The Company's IPO and Formation Transactions

Note 2. The Company's IPO and Formation Transactions

Both the Company and the Operating Partnership commenced operations upon completion of the IPO and the Formation Transactions on May 17, 2019. The Company's operations are carried out primarily through the Operating Partnership and the wholly owned subsidiaries of the Operating Partnership.

On May 17, 2019, the Company completed its IPO, pursuant to which it sold 4,500,000 shares of its Class A common stock at a public offering price of $17.00 per share. The Company raised $76.5 million in gross proceeds, resulting in net proceeds of approximately $71.1 million after deducting approximately $5.4 million in underwriting discounts and before giving effect to $6.4 million in other expenses relating to the IPO. The Company's Class A common stock began trading on the New York Stock Exchange under the symbol "PSTL" on May 15, 2019.

In connection with the IPO and Formation Transactions, the Company, through its Operating Partnership, used a portion of the net proceeds to repay approximately $31.7 million of outstanding indebtedness related to the Predecessor.

Pursuant to the Formation Transactions, the Company, directly or through the Operating Partnership, acquired the entities that comprise the Predecessor. The initial properties and other interests were contributed in exchange for 1,333,112 OP Units, 637,058 shares of Class A common stock, 27,206 shares of Voting Equivalency stock and $1.9 million of cash. In addition, the Operating Partnership purchased 81 post office properties (the "Acquisition Properties") in exchange for $26.9 million in cash, including approximately $1.0 million paid to Mr. Spodek, the Company's chief executive officer and a director for his non-controlling ownership in nine of the Acquisition Properties.

Because of the timing of the IPO and the Formation Transactions, the Company's results of operations for the three months ended March 31, 2019 reflect the results of operations of the Predecessor. The financial condition as of December 31, 2019 and March 31, 2020 and results of operations for the three months ended March 31, 2020 reflect solely the financial condition and operations of the Company. References in these notes to consolidated financial statements to "Postal Realty Trust, Inc." signify the Company for the period after the completion of the IPO and the Formation Transactions and the Predecessor for all prior periods. 

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Related Party Transactions (Tables)

3 Months Ended

Mar. 31, 2020

Related Party Transactions [Abstract]

Schedule of future minimum rental payments

The following table represents the Company's future rental payments related to the New Lease:

Year Ending December 31,	Amount
2020 – Remaining	$	138,367
2021		188,869
2022		194,535
2023		200,371
2024		76,244
Total	$	798,386

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Document and Entity Information - shares	3 Months Ended
	Mar. 31, 2020	Jun. 25, 2020
Document and Entity Information [Abstract]
Entity Registrant Name	Postal Realty Trust, Inc.
Entity Central Index Key	0001759774
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Document Type	10-Q
Document Period End Date	Mar. 31, 2020
Entity Filer Category	Non-accelerated Filer
Entity Small Business	true
Entity Ex Transition Period	false
Entity Shell Company	false
Entity Emerging Growth Company	true
Entity Current Reporting Status	Yes
Entity File Number	001-38903
Entity Interactive Data Current	Yes
Entity Incorporation State Country Code	MD
Entity Common Stock, Shares Outstanding		5,381,564
Document Fiscal Period Focus	Q1
Document Fiscal Year Focus	2020

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Consolidated and Combined Consolidated Statements of Changes in Equity (Unaudited) - USD ($)	Common Stock Predecessor	Common Stock	Additional Paid-In Capital Predecessor	Additional Paid-In Capital	Accumulated Equity (Deficit) Predecessor	Accumulated Equity (Deficit)	Member's Equity (Deficit) Predecessor	Member's Equity (Deficit)	Total Stockholders' & Predecessor equity Predecessor	Total Stockholders' & Predecessor equity	Operating Partnership unitholders' noncontrolling interests Predecessor	Operating Partnership unitholders' noncontrolling interests	Non-controlling interests in properties Predecessor	Non-controlling interests in properties	Predecessor	Total
Beginning Balance at Dec. 31, 2018	$ 4,000,200		$ 3,441,493		$ (11,003,876)		$ (2,095,823)		$ (5,658,006)				$ 44,593		$ (5,613,413)
Capital contributions			397,121				1,377,758		1,774,879						1,774,879
Distributions and dividends			(150,000)				(1,067,515)		(1,217,515)				(521)		(1,218,036)
Net income (loss)					(173,554)		427,787		254,233				2,843		257,076
Ending Balance at Mar. 31, 2019	$ 4,000,200		$ 3,688,614		$ (11,177,430)		$ (1,357,793)		$ (4,846,409)				$ 46,915		$ (4,799,494)
Beginning Balance at Dec. 31, 2019		$ 53,131		$ 51,396,226		$ (2,575,754)				$ 48,873,603		$ 20,949,672				$ 69,823,275
Beginning Balance, Shares at Dec. 31, 2019		5,313,110
Issuance of OP Units in connection with transaction												7,921,828				7,921,828
Issuance and amortization of equity-based compensation		$ 1,035		519,215						520,250		185,015				705,265
Issuance and amortization of equity-based compensation, shares		103,463
Issuance and amortization under the Employee Stock Purchase Plan ("ESPP")		$ 35		53,160						53,195						53,195
Issuance and amortization under the Employee Stock Purchase Plan ("ESPP"), shares		3,538
Dividends declared ($0.17 per share)						(923,348)				(923,348)		(478,385)				(1,401,733)
Net income (loss)						(677,755)				(677,755)		(352,071)				(1,029,826)
Reallocation of non-controlling interest				2,218,990						2,218,990		(2,218,990)
Ending Balance at Mar. 31, 2020		$ 54,201		$ 54,187,591		$ (4,176,857)				$ 50,064,935		$ 26,007,069				$ 76,072,004
Ending Balance, Shares at Mar. 31, 2020		5,420,111

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Real Estate Acquisitions (Tables)

3 Months Ended

Mar. 31, 2020

Real Estate [Abstract]

Schedule total purchase price including transaction costs

Three Months Ended	Number of Properties		Land		Building and Improvements		Tenant Improvements		In-place lease intangibles		Above- market leases		Below- market leases			Other (1)			Total (2)
March 31, 2020(3)(4)(5)		83	$	4,824,009	$	24,605,963	$	287,749	$	2,453,318	$	7,148	$	(1,618,115	)		(34,098	)	$	30,525,974

Explanatory Notes:

(1) Includes an intangible liability related to unfavorable operating leases on three properties that is included in "Accounts Payable, accrued expenses and other" on the Company's Consolidated Balance Sheets.

(2) Includes acquisition costs of $0.3 million for the three months ended March 31, 2020.

(3) Includes the acquisition of a 21-building portfolio leased to the USPS. The contract purchase price for the portfolio was $13.8 million, exclusive of closing costs, and giving effect to 483,333 OP Units issued to the sellers at a value of $17.00 per unit. The closing price of the Company's common stock on January 10, 2020 was $16.39; therefore, total consideration at closing, including closing costs, was approximately $13.6 million of which $7.9 million represented the non-cash consideration (the value of  the OP Units) issued to the sellers.

(4)	Includes the acquisition of a 42-building portfolio leased to the USPS. The aggregate purchase price of such portfolio was approximately $8.8 million, including closing costs, which was funded with borrowings under our Credit Facility.
(5)	Includes the acquisition of 20 postal properties in individual or smaller portfolio transactions for approximately  $8.1 million, including closing costs.

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Summary of Significant Accounting Policies (Details) - USD ($)	Mar. 31, 2020	Dec. 31, 2019	Mar. 31, 2019	Dec. 31, 2018
Cash	$ 2,844,040	$ 12,475,537
Escrows and reserves:
Maintenance reserve	664,165	663,339
ESPP reserve	27,601	44,727
Cash and escrows and reserves	$ 3,535,806	$ 13,183,603
Predecessor [Member]
Escrows and reserves:
Cash and escrows and reserves			$ 994,270	$ 861,875

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Intangible Assets and Liabilities (Details) - USD ($)	Mar. 31, 2020	Dec. 31, 2019
In-place lease intangibles [Member]
Gross Asset (Liability)	$ 16,241,342	$ 13,788,024
Accumulated (Amortization)/Accretion	(7,580,929)	(6,472,157)
Net Carrying Amount	8,660,413	7,315,867
Above-market leases [Member]
Gross Asset (Liability)	47,768	40,620
Accumulated (Amortization)/Accretion	(21,602)	(18,496)
Net Carrying Amount	26,166	22,124
Below-market leases [Member]
Gross Asset (Liability)	(10,290,416)	(8,672,301)
Accumulated (Amortization)/Accretion	2,390,563	2,071,182
Net Carrying Amount	$ (7,899,853)	$ (6,601,119)

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Income Taxes

3 Months Ended

Mar. 31, 2020

Income Tax Disclosure [Abstract]

Income Taxes

Note 8. Income Taxes

Income tax expense related to UPH for the three months ended March 31, 2019 was $39,749 at an effective tax rate of 13.4%. The effective tax rate for the three months ended March 31, 2019 differs from the statutory rate of 21% due to certain entities included in the combined consolidated financial statements that are not subject to tax at the entity level, state taxes and interest and penalties from unrecognized tax benefits primarily related to the utilization of loss carryforwards.

In connection with the IPO, the Company and PRM jointly elected to treat PRM as a TRS. PRM performs management services, including for properties the Company does not own. PRM generates income, resulting in federal and state corporate income tax liability for PRM. For the three months ended March 31, 2020, income tax expense related to PRM was $10,197.

The Company has unrecognized tax benefits as of March 31, 2020 of $0.6 million which is inclusive of interest and penalties and a corresponding indemnification asset which is recorded in prepaid expenses and other assets on the consolidated balance sheet.

In connection with the IPO, the indirect sole shareholder of UPH agreed to reimburse the Company for unrecognized tax benefits primarily related to the utilization of certain loss carryforwards at UPH. The Company recorded an indemnification asset in the same amount as the unrecognized tax benefits. The indirect sole shareholder of UPH will be responsible for all tax related matters related to UPH.

On March 27, 2020, the President signed into law the Coronavirus Aid, Relief, and Economic Security Act (the "CARES Act"). The CARES Act was enacted to provide economic relief to companies and individuals in response to the COVID-19 pandemic. Included in the CARES Act are tax provisions which increase allowable interest expense deductions for 2019 and 2020 and increase the ability for taxpayers to use net operating losses. While we do not expect these provisions to have a material impact on the Company's taxable income or tax liabilities, we will continue to analyze the provisions of the CARES Act and related guidance as it is published.

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Real Estate Acquisitions

3 Months Ended

Mar. 31, 2020

Real Estate [Abstract]

Real Estate Acquisitions

Note 4. Real Estate Acquisitions

The following tables summarizes the Company's acquisitions for the three months ended March 31, 2020. The purchase prices including transaction costs were allocated to the separately identifiable tangible and intangible assets and liabilities based on their relative fair values at the date of allocation. The total purchase price including transaction costs was allocated as follows:

Three Months Ended	Number of Properties		Land		Building and Improvements		Tenant Improvements		In-place lease intangibles		Above- market leases		Below- market leases			Other (1)			Total (2)
March 31, 2020(3)(4)(5)		83	$	4,824,009	$	24,605,963	$	287,749	$	2,453,318	$	7,148	$	(1,618,115	)		(34,098	)	$	30,525,974

Explanatory Notes:

(1) Includes an intangible liability related to unfavorable operating leases on three properties that is included in "Accounts Payable, accrued expenses and other" on the Company's Consolidated Balance Sheets.

(2) Includes acquisition costs of $0.3 million for the three months ended March 31, 2020.

(3) Includes the acquisition of a 21-building portfolio leased to the USPS. The contract purchase price for the portfolio was $13.8 million, exclusive of closing costs, and giving effect to 483,333 OP Units issued to the sellers at a value of $17.00 per unit. The closing price of the Company's common stock on January 10, 2020 was $16.39; therefore, total consideration at closing, including closing costs, was approximately $13.6 million of which $7.9 million represented the non-cash consideration (the value of  the OP Units) issued to the sellers.

(4)	Includes the acquisition of a 42-building portfolio leased to the USPS. The aggregate purchase price of such portfolio was approximately $8.8 million, including closing costs, which was funded with borrowings under our Credit Facility.
(5)	Includes the acquisition of 20 postal properties in individual or smaller portfolio transactions for approximately  $8.1 million, including closing costs.

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Commitments and Contingencies

3 Months Ended

Mar. 31, 2020

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

Note 12. Commitments and Contingencies

As of March 31, 2020, the Company was not involved in any litigation nor to its knowledge is any litigation threatened against the Predecessor or the Company, as applicable, that, in management's opinion, would result in any material adverse effect on the Company's financial position, or which is not covered by insurance.

In the ordinary course of the Company's business, the Company enters into non-binding (except with regard to exclusivity and confidentiality) letters of intent indicating a willingness to negotiate for acquisitions. There can be no assurance that definitive contracts will be entered into with respect to any matter covered by letters of intent, that the Company will close the transactions contemplated by such contracts on time, or that the Company will consummate any transaction contemplated by any definitive contract.