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 June 30, 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 August 11, 2020, the registrant had 9,449,352 shares of Class A common stock outstanding.

TABLE OF CONTENTS

		Page
PART I. FINANCIAL INFORMATION
Item 1.	Financial Statements	1
Consolidated Balance Sheets as of June 30, 2020 and December 31, 2019		1
Consolidated and Combined Consolidated Statements of Operations for the Three and Six Months Ended June 30, 2020 and 2019		2
Consolidated and Combined Consolidated Statements of Equity (Deficit) for the Three and Six Months Ended June 30, 2020 and 2019		3
Consolidated and Combined Consolidated Statements of Cash Flows for the Six Months Ended June 30, 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	18
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	33
Item 4.	Controls and Procedures	33
PART II. OTHER INFORMATION
Item 1.	Legal Proceedings	34
Item 1A.	Risk Factors	34
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	36
Item 3.	Defaults Upon Senior Securities	36
Item 4.	Mine Safety Disclosures	36
Item 5.	Other Information	36
Item 6.	Exhibits	36

i

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

POSTAL REALTY TRUST, INC.

CONSOLIDATED BALANCE SHEETS

	June 30, 2020			December 31, 2019
	(Unaudited)
Assets
Real estate properties
Land	$	32,528,667		$	25,147,732
Building and improvements		125,168,945			92,873,637
Tenant improvements		2,910,913			2,562,293
Total real estate properties		160,608,525			120,583,662
Less: Accumulated depreciation		(10,735,163	)		(8,813,579	)
Total real estate properties, net		149,873,362			111,770,083
Cash		4,895,427			12,475,537
Rent and other receivables		1,991,301			1,710,314
Prepaid expenses and other assets, net		4,667,105			2,752,862
Escrow and reserves		714,251			708,066
Deferred rent receivable		87,035			33,344
In-place lease intangibles, net		8,258,395			7,315,867
Above market leases, net		22,590			22,124
Total Assets	$	170,509,466		$	136,788,197
Liabilities and Equity
Liabilities:
Secured borrowings, net	$	16,623,546		$	3,211,004
Revolving credit facility		67,469,056			54,000,000
Accounts payable, accrued expenses and other		4,236,786			3,152,799
Below market leases, net		7,639,889			6,601,119
Total Liabilities		95,969,277			66,964,922
Commitments and Contingencies
Equity:
Class A common stock, par value $0.01 per share; 500,000,000 shares authorized, 5,423,861 and 5,285,904 shares issued and outstanding as of June 30, 2020 and December 31, 2019, respectively		54,239			52,859
Class B common stock, par value $0.01 per share; 27,206 shares authorized: 27,206 shares issued and outstanding as of June 30, 2020 and December 31, 2019		272			272
Additional paid-in capital		54,351,945			51,396,226
Accumulated deficit		(5,416,113	)		(2,575,754	)
Total Stockholders’ Equity		48,990,343			48,873,603
Operating Partnership unitholders’ non-controlling interests		25,549,846			20,949,672
Total Equity		74,540,189			69,823,275
Total Liabilities and Equity	$	170,509,466		$	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 June 30,						For the Six Months Ended June 30,
	2020			2019			2020			2019
Revenues:
Rental income	$	4,640,403		$	1,856,428		$	8,941,174		$	3,348,814
Tenant reimbursements		652,748			273,229			1,254,094			510,085
Fee and other income		311,786			276,325			607,305			563,251
Total revenues		5,604,937			2,405,982			10,802,573			4,422,150
Operating expenses:
Real estate taxes		696,865			288,771			1,338,809			538,560
Property operating expenses		394,434			248,586			801,482			500,292
General and administrative		1,916,905			968,032			4,218,448			1,344,923
Depreciation and amortization		2,161,782			767,772			4,196,650			1,248,215
Total operating expenses		5,169,986			2,273,161			10,555,389			3,631,990
Income from operations		434,951			132,821			247,184			790,160
Interest expense, net:
Contractual interest expense		(544,915	)		(228,040	)		(1,273,141	)		(586,507	)
Write-off and amortization of deferred financing fees		(115,399	)		(1,854	)		(219,861	)		(5,035	)
Loss on early extinguishment of predecessor debt		—			(185,586	)		—			(185,586	)
Interest income		661			1,124			1,487			2,258
Total interest expense, net		(659,653	)		(414,356	)		(1,491,515	)		(774,870	)
(Loss) income before income tax expense		(224,702	)		(281,535	)		(1,244,331	)		15,290
Income tax expense		(4,925	)		(6,259	)		(15,122	)		(46,008	)
Net loss		(229,627	)		(287,794	)		(1,259,453	)		(30,718	)
Net income attributable to non-controlling interest in properties		—			(1,493	)		—			(4,336	)
Net income attributable to Predecessor		—			(209,181	)		—			(463,414	)
Net loss attributable to Operating Partnership unitholders’ non-controlling interests		79,077			106,672			431,148			106,672
Net loss attributable to common stockholders	$	(150,550	)	$	(391,796	)	$	(828,305	)	$	(391,796	)
Net loss per share:
Basic and Diluted	$	(0.05	)	$	(0.08	)	$	(0.19	)	$	(0.08	)
Weighted average common shares outstanding:
Basic and Diluted		5,205,153			5,164,264			5,189,900			5,164,264

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

(DEFICIT) 

(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	)
Capital contributions		-			-			-			-			293,373			293,373			-			-			293,373
Distributions and dividends		-			-			(549,191	)		-			(310,174	)		(859,365	)		-			(5,667	)		(865,032	)
Net income (loss)		-			-			-			3,210			205,971			209,181			-			1,493			210,674
Balance - May 16, 2019		-		$	4,000,200		$	3,139,423		$	(11,174,220	)	$	(1,168,623	)	$	(5,203,220	)	$	-		$	42,741		$	(5,160,479	)
Net proceeds from sale of Common Stock		4,500,000			45,000			64,665,261			-			-			64,710,261			-			-			64,710,261
Formation transactions		664,264			(3,993,557	)		(31,798,499	)		11,174,220			1,168,623			(23,449,213	)		22,662,907			(42,741	)		(829,047	)
Issuance and amortization of equity-based compensation		148,529			1,485			126,755			-			-			128,240			62,103			-			190,343
Dividends declared		-			-			-			(334,706	)		-			(334,706	)		(91,213	)		-			(425,919	)
Net income (loss)		-			-			-			(391,796	)		-			(391,796	)		(106,672	)		-			(498,468	)
Reallocation of non-controlling interest		-			-			10,117,974			-			-			10,117,974			(10,117,974	)		-			-
Balance – June 30, 2019		5,312,793			53,128			46,250,914			(726,502	)		-			45,577,540			12,409,152			-			57,986,692
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
Issuance and amortization of equity-based compensation		42,297			423			351,248			-			-			351,671			181,352			-			533,023
Amortization under ESPP		-			-			1,557			-			-			1,557			-			-			1,557
Restricted stock withholding		(11,342	)		(113	)		(182,402	)		-			-			(182,515	)		-			-			(182,515	)
Dividends declared ($0.20 per share)		-			-			-			(1,088,706	)		-			(1,088,706	)		(565,547	)		-			(1,654,253	)
Net loss		-			-			-			(150,550	)		-			(150,550	)		(79,077	)		-			(229,627	)
Reallocation of non-controlling interest		-			-			(6,049	)		-			-			(6,049	)		6,049			-			-
Balance – June 30, 2020		5,451,066		$	54,511		$	54,351,945		$	(5,416,113	)	$	-		$	48,990,343		$	25,549,846			-			74,540,189

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 Six Months Ended June 30,
	2020			2019
Cash flows from operating activities:
Net loss	$	(1,259,453	)	$	(30,718	)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation		1,969,299			612,135
Amortization of in-place intangibles		2,227,351			636,080
Write-off and amortization of deferred financing costs		219,861			5,035
Amortization of above/below market leases		(609,562	)		(190,828	)
Amortization of intangible liability		(2,762	)		-
Equity based compensation		1,248,278			190,343
Loss on extinguishment debt		-			185,586
Deferred rent receivable		(53,691	)		(9,804	)
Deferred rent expense payable		9,470			(44,156	)
Deferred tax liability		-			(65,895	)
Changes in assets and liabilities:
Rent and other receivables		(280,987	)		(519,503	)
Prepaid expenses and other assets		(361,717	)		(117,106	)
Due to affiliates		-			63,879
Accounts payable, accrued expenses and other		101,147			146,944
Net cash provided by operating activities		3,207,234			861,992
Cash flows from investing activities:
Acquisition of real estate		(33,212,115	)		(26,908,804	)
Acquisition and other deposits		(639,501	)		(280,000	)
Capital improvements		(341,446	)		(25,695	)
Other investing activities		(72,900	)		-
Net cash used in investing activities		(34,265,962	)		(27,214,499	)
Cash flows from financing activities:
Proceeds from secured borrowings		13,674,311			-
Repayments of secured borrowings		(54,322	)		(32,165,494	)
Proceeds from revolving credit facility		20,000,000			-
Repayments of revolving credit facility		(6,530,944	)		-
Proceeds from other financing activity		557,000			-
Repayments from other financing activity		(191,597	)		-
Net proceeds from issuance of shares		-			69,684,886
Other formation transactions		-			(163,204	)
Debt issuance costs		(766,704	)		-
Proceeds from issuance of shares		44,650			-
Shares withheld for payment of taxes on restricted share vesting		(182,402	)		-
Contributions from partners and members		-			2,068,252
Distributions and dividends		(3,055,986	)		(1,587,664	)
Other financing activities		(9,203	)
Net cash provided by financing activities		23,484,803			37,836,776
Net (decrease) increase in Cash and Escrows and Reserves		(7,573,925	)		11,484,269
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	$	5,609,678		$	12,346,144

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 June 30, 2020, the Company held an approximately 65.7% 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 June 30, 2020, the Company owned a portfolio of 568 postal properties located in 47 states. Our properties were leased to a single tenant, the United States Postal Service (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 400 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”).

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.

5

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

UNAUDITED (CONTINUED)

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.

The Company’s results of operations for the three and six months ended June 30, 2019 reflect the results of operations of the Predecessor together with the Company, while the financial condition as of December 31, 2019 and June 30, 2020 reflects solely 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.

The following is a summary of the Predecessor Statement of Operations for the period from April 1, 2019 through May 16, 2019 and for the period from January 1, 2019 through May 16, 2019, and the Company’s Statement of Operations for the period from May 17, 2019 through June 30, 2019. These amounts are included in the consolidated and combined consolidated statement of operations herein for the three and six months ended June 30, 2019.

	Predecessor						Postal Realty Trust, Inc.
	April 1,			January 1,			May 17,
	2019			2019			2019
	through			through			through
	May 16,			May 16,			June 30,
	2019			2019			2019
Revenues:
Rental income	$	756,969		$	2,249,355		$	1,099,459
Tenant reimbursements		111,219			348,075			162,010
Fee and other income		141,033			427,959			135,292
Total revenues		1,009,221			3,025,389			1,396,761
Operating Expenses:
Real estate taxes		117,723			367,512			171,048
Property operating expenses		115,010			366,716			133,576
General and administrative		106,557			483,448			861,475
Depreciation and amortization		245,313			725,756			522,459
Total operating expenses		584,603			1,943,432			1,688,558
Income (loss) from operations		424,618			1,081,957			(291,797	)
Interest expense, net:
Contractual interest expense		(212,352	)		(570,819	)		(15,688	)
Amortization of deferred financing costs		(1,592	)		(4,773	)		(262	)
Loss on early extinguishment of Predecessor debt		-			-			(185,586	)
Interest income		-			1,134			1,124
Total interest expense, net		(213,944	)		(574,458	)		(200,412	)
Income (loss) before income tax expense		210,674			507,499			(492,209	)
Income tax expense		-			(39,749	)		(6,259	)
Net income (loss)		210,674			467,750			(498,468	)
Less:
Net income attributable to noncontrolling interest in properties		(1,493	)		(4,336	)		-
Net income attributable to Predecessor	$	209,181		$	463,414			-
Net loss attributable to Operating Partnership unitholders’ noncontrolling interests								106,672
Net loss attributable to common stockholders							$	(391,796	)

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.

Reclassifications

Certain prior period amounts have been reclassified to conform to the current period’s presentation.

Cash and Escrows and Reserves

Cash includes unrestricted cash with a maturity of three months or less. Escrows and reserves consists 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
	June 30, 2020		December 31, 2019
Cash	$	4,895,427	$	12,475,537
Escrows and reserves:
Maintenance reserve		664,825		663,339
ESPP reserve		49,426		44,727
Cash and escrows and reserves	$	5,609,678	$	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 June 30, 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 June 30, 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 $16.9 million and $3.2 million as compared to the principal balance of $16.9 million and $3.2 million as of June 30, 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 June 30, 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 June 30, 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 and six months ended June 30, 2020 and 2019. 

Concentration of Credit Risks 

As of June 30, 2020, the Company’s properties were leased to a single tenant, the USPS. For the six months ended June 30, 2020, no state had a concentration of rental income over 10% as a percentage of total rental income. For the six months ended June 30, 2019, our total rental income of $3.3 million was concentrated in the following states: Texas (12.7%), Massachusetts (12.3%), Wisconsin (10.9%) and Pennsylvania (10.2%). 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. 

8

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

UNAUDITED (CONTINUED)

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 2,855,102 potentially dilutive shares outstanding related to the issuance of OP Units and LTIP Units held by non-controlling interests as of June 30, 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 June 30, 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. 

9

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 six months ended June 30, 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 acquisition. 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	$	4,825,507	$	24,572,597	$	293,726	$	2,477,174	$	7,148	$	(1,616,080	)	$	(34,098	)	$	30,525,974
June 30, 2020(6)		19		2,555,428		7,344,021		54,894		692,705		-		(38,934	)		-			10,608,114
		102	$	7,380,935	$	31,916,618	$	348,620	$	3,169,879	$	7,148	$	(1,655,014	)	$	(34,098	)	$	41,134,088

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 and $0.2 million for the three months ended June 30, 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.

(6) Includes the acquisition of a 13-building portfolio leased to the USPS in various states for approximately $7.2 million, including closing costs. In addition, the Company purchased six postal properties in individual or smaller portfolio transactions for approximately $3.4 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
June 30, 2020:
In-place lease intangibles	$	16,957,903		$	(8,699,508	)	$	8,258,395
Above-market leases		47,768			(25,178	)		22,590
Below-market leases		(10,327,315	)		2,687,426			(7,639,889)
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 $2.2 million for the three and six months ended June 30, 2020, respectively and $0.4 million and $0.6 million for the three and six months ended June 30, 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 $3,576 and $6,682 for the three and six months ended June 30, 2020, respectively, and $2,616 and $4,986 for the three and six months ended June 30, 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 $0.6 million for the three and six months ended June 30, 2020, respectively, and $0.1 million and $0.2 million for the three and six months ended June 30, 2019, respectively, and is included in “Rental income” on the Company’s Consolidated and Combined Consolidated Statements of Operations. 

10

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

UNAUDITED (CONTINUED)

Future amortization/accretion of these intangibles is below:

Year Ending December 31,	In-place lease intangibles		Above-market leases		Below-market leases
2020 – Remaining	$	1,945,917	$	5,889	$	(529,407	)
2021		2,968,481		6,717		(1,004,488	)
2022		1,549,204		5,774		(893,108	)
2023		917,586		3,139		(811,708	)
2024		452,078		1,071		(721,221	)
Thereafter		425,129		-		(3,679,957	)
Total	$	8,258,395	$	22,590	$	(7,639,889	)

Note 6. Debt

The following table summarizes the Company’s indebtedness as of June 30, 2020 and December 31, 2019:

	Outstanding Balance as of June 30, 2020			Outstanding Balance as of December 31, 2019			Interest Rate at June 30, 2020			Maturity Date
Revolving Credit Facility(1)	$	67,469,056		$	54,000,000			LIBOR+170bps	(2)	September 2023
Vision Bank(3)		1,490,882			1,522,672			4.00	%	September 2036
First Oklahoma Bank(4)		371,120			378,005			4.50	%	December 2037
Vision Bank – 2018(5)		884,739			900,385			5.00	%	January 2038
Seller Financing(6)		445,000			445,000			6.00	%	January 2025
First Oklahoma Bank – April 2020(7)		4,522,311			-			4.25	%	April 2040
First Oklahoma Bank – June 2020(8)		9,152,000			-			4.25	%	June 2040
Total Principal		84,335,108			57,246,062
Unamortized deferred financing costs		(242,506	)		(35,058	)
Total Debt	$	84,092,602		$	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. 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 First Oklahoma Bank-June 2020 secured mortgage financing.  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 and six months ended June 30, 2020, the Company incurred $0.1 million and $0.2 million, respectively, 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 June 30, 2020, the Company was in compliance with all of the Credit Facility’s debt covenants.

11

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

UNAUDITED (CONTINUED)

(2) As of June 30, 2020, the one-month LIBOR rate was 0.16%.

(3) Five properties are collateralized under this loan as of June 30, 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.

(7) In connection with the purchase of a 13-building portfolio, 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.

(8) The loan is collateralized by first mortgage liens on 22 properties. Interest rates resets in January 2027 to the greater of Prime or 4.25%. The financing matures in June 2040.

The scheduled principal repayments of indebtedness as of June 30, 2020 are as follows:

Year Ending December 31,	Amount
2020 – Remaining	$	55,189
2021		220,587
2022		701,225
2023		68,204,893
2024		767,852
Thereafter		14,385,362
Total	$	84,335,108

Note 7. Leases

As of June 30, 2020, all of the properties owned by the Company were occupied by a single tenant, 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 June 30, 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)	$	7,578,190
2021		14,219,786
2022		10,753,252
2023		8,248,719
2024		5,703,053
Thereafter		7,326,944
Total	$	53,829,944

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 June 30, 2020, the leases at 43 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. Holdover rent is paid as the greater of market rent or the rent amount due under the expired lease.

12

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

UNAUDITED (CONTINUED)

Impact of COVID-19

On March 11, 2020, the World Health Organization declared the outbreak of a coronavirus (COVID-19) a pandemic. The resulting restrictions on travel and quarantines imposed have had a negative impact on the U.S. economy and business activity globally, the full impact of which is not yet known and may result in an adverse impact to the Company’s tenant and operating results.

During the six months ended June 30, 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	$	11,200
2021		22,400
2022		22,400
2023		22,400
2024		22,960
Thereafter		1,159,690
Total	$	1,261,050

Note 8. Income Taxes

Income tax expense related to UPH for the three and six months ended June 30, 2019 was zero and $39,749 at an effective tax rate of 13.4%. The effective tax rate for the three months and six months ended June 30, 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. During the three and six months ended June 30, 2020, the Company recorded a benefit of $9,657 due to finalizing certain state taxes filings of UPH.

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 and six months ended June 30, 2020, income tax expense related to PRM was $14,582 and $24,779, respectively.

The Company has unrecognized tax benefits as of June 30, 2020 of $0.5 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 $0.2 million and $0.5 million for the three and six months ended June 30, 2020, respectively and the Predecessor recognized management fee income of $0.1 million and $0.4 million for the three and six months ended June 30, 2019 from various properties which were affiliated with Mr. Spodek. Following the IPO, PRM recognized management fee income of $0.1 million for the three and six months ended June 30, 2019 from various properties which are affiliated with the Company’s CEO. 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 June 30, 2020 and December 31, 2019, respectively, are included in “Rents and other receivables” on the Company’s Consolidated Balance Sheets.

13

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

UNAUDITED (CONTINUED)

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 and six months ended June 30, 2020 was $47,782 and $95,564, respectively, was recorded in “General and administrative expenses” on the Company’s Consolidated and Combined Consolidated Statements of Operations.

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

Year Ending December 31,	Amount
2020 – Remaining	$	84,975
2021		188,869
2022		194,535
2023		200,371
2024		76,244
Total	$	744,994

Transfer of Real Property

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.

Guarantees

Mr. Spodek, our chief executive officer, has personally guaranteed our loans with First Oklahoma Bank that were obtained prior to 2020 and Vision Bank, totaling $2.7 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 June 30,						For the Six Months Ended June 30,
	2020			2019			2020			2019
Numerator for earnings per share – basic and diluted:
Net loss attributable to common stockholders	$	(150,550	)	$	(391,796	)	$	(828,305	)	$	(391,796	)
Less: Income attributable to participating securities		(89,316	)		(16,715	)		(160,851	)		(16,715	)
Numerator for earnings per share — basic and diluted	$	(239,866	)	$	(408,511	)	$	(989,156	)	$	(408,511	)
Denominator for earnings per share – basic and diluted		5,205,153			5,164,264			5,189,900			5,164,264
Basic and diluted earnings per share	$	(0.05	)	$	(0.08	)	$	(0.19	)	$	(0.08	)

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

UNAUDITED (CONTINUED)

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 and six months ended June 30, 2020, the Board approved and the Company declared and paid dividends of $1.7 million and $3.1 million, respectively, to Class A common stockholders, Voting Equivalency stockholders, OP unitholders and LTIP unitholders, or $0.37 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
April 30, 2020	May 11, 2020	May 29, 2020	$	0.20

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. During the six months ended June 30, 2020, the Company issued 483,333 OP Units in January 2020 in connection with a portfolio that the Company acquired, 53,230 LTIP Units in February 2020 to the Company’s CEO for his 2019 incentive bonus, 13,708 LTIP Units in March 2020 to the Company’s CEO and 27,365 LTIP Units in May 2020 to the Company’s CEO for his salary for the period of May 18, 2020 to December 31, 2020.

As of June 30, 2020, and December 31, 2019, non-controlling interests consisted of 2,640,795 OP Units and 214,307 LTIP Units and 2,157,462 OP Units and 120,004 LTIP Units, respectively. This represented approximately 34.3% and 30.0% of the outstanding Operating Partnership units as of June 30, 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. On April 27, 2020, the Board of Directors amended the Equity Incentive Plan to increase the total number of shares of Class A common stock that may be issued under the Plan from 541,584 shares to 1,291,584 shares. The stockholders approved such amendment on June 26, 2020. As of June 30, 2020, the remaining shares available under the Plan for future issuance was 751,697. 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  June 30, 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, as of January 1, 2020		148,847			120,003		—		268,850		$	16.96
Granted		146,348			94,303		62,096		302,747		$	14.20
Vesting of restricted shares (5)		(61,181	)		—		—		(61,181	)	$	17.00
Forfeited		(588	)		—		—		(588	)	$	17.00
Outstanding, as of June 30, 2020		233,426			214,306		62,096		509,828		$	15.35

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 six months ended June 30, 2020, 2,843 LTIPs issued to an employee vested as a result of a modification of the award and 13,708 LTIPs to the Company’s CEO. 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 six months ended June 30, 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.

(5) Includes 49,839 of restricted shares that vested and 11,342 shares of restricted shares that were withheld to satisfy minimum statutory withholding requirements.

During the three and six months ended June 30, 2020, the Company recognized compensation expense of $0.5 million and $1.2 million, respectively, and during the three and six months ended June 30, 2019 the Company recognized $0.2 million, related to all awards which is recorded in “General and administrative” on the Company’s Consolidated and Combined Consolidated Statements of Operations.

The fair value of restricted shares that vested during the six months ended June 30, 2020 was $1.0 million. As of June 30, 2020, there was $6.6 million of total unrecognized compensation cost related to unvested awards, which is expected to be recognized over a weighted average period of 4.25 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 June 30, 2020, 3,538 shares have been issued under the ESPP since commencement. During the three and six months ended June 30, 2020, the Company recognized compensation expense of $1,557 and $10,102 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 June 30, 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

On July 8, 2020, the Company borrowed an additional $4.5 million under the Credit Facility.

On July 15, 2020, the Company priced a public offering of 3.5 million shares of its Class A Common Stock (the “Follow-on Offering”) at $13.00 per share. On July 17, 2020, the underwriters purchased an additional 521,840 shares pursuant to a 30-day option to purchase up to an additional 525,000 shares at $13.00 per share (the “Additional Shares”). The Follow-on Offering, including the Additional Shares, closed on July 20, 2020 resulting in $52.2 million in gross proceeds, and approximately $49.4 million in net proceeds after deducting approximately $2.9 million in underwriting discounts and before giving effect to $0.9 million in other estimated expenses relating to the Follow-on Offering.

On July 17, 2020, the Company borrowed an additional $6.5 million under the Credit Facility.

On July 24, 2020, the Company paid down approximately $42.0 million under the Credit Facility with a portion of the proceeds received from the Follow-on Offering.

On July 30, 2020, the Company's Board of Directors approved, and the Company declared a second quarter common stock dividend of $0.205 per share which is payable on August 31, 2020 to stockholders of record as of August 14, 2020.

On August 7, 2020, the Company borrowed an additional $3.0 million under the Credit Facility. Currently, the Company had $39.5 million drawn on its Credit Facility.

As of August 11, 2020, we purchased 98 postal properties for approximately $23.4 million during the period subsequent to June 30, 2020.

As of August 11, 2020, the Company had entered into definitive agreements to acquire postal properties leased to the USPS for approximately $3.7 million. Formal due diligence has been completed and the majority of these transactions are 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 August 11, 2020, the leases at 55 of our properties (consisting of one lease for which the lease expired in 2018 which we acquired in July 2020, 21 properties for which leases expired in 2019, including two leases that expired as of the date of our acquisition, and 33 properties for which leases expired in 2020) had expired and the USPS is occupying such properties as a holdover tenant, representing an aggregate annualized rental income of $2.4 million. As of the date of this report, the USPS has not vacated or notified us of its intention to vacate any of these 55 properties. The Company has received all holdover rent on a month to month basis, with the USPS paying the greater of estimated market rent or the rent amount due 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. As of the date of this report, we have not renewed or entered into revised leases for any of our leases with the USPS that are currently in holdover. In addition, we have not entered into any definitive agreement or addendum with to respect to the leases at the properties for which the USPS occupies as a holdover tenant.

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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, our Annual Report on Form 10-K for the year ended December 31, 2019 and other reports filed with Securities and Exchange Commission

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;

● our ability to come to an agreement with the USPS regarding new leases;

● 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 June 30, 2020, we owned approximately 65.7% 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.

Follow-on Offering

On July 15, 2020, we priced a public offering of 3.5 million shares of our Class A Common Stock (the “Follow-on Offering”) at $13.00 per share. On July 17, 2020, the underwriters purchased an additional 521,840 shares pursuant to a 30-day option to purchase up to an additional 525,000 shares at $13.00 per share (the “Additional Shares”). The Follow-on Offering, including the Additional Shares, closed on July 20, 2020 resulting in $52.2 million in gross proceeds and approximately $49.4 million in net proceeds after deducting approximately $2.9 million in underwriting discounts and before giving effect to $0.9 million in other estimated expenses relating to the Follow-on Offering.

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 we believe 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 June 30, 2020, our portfolio consisted of 568 owned postal properties, located in 47 states and comprising approximately 1.8 million net leasable interior square feet.

Q2 2020 Highlights

Acquisitions and Related Financings

● Closed on the acquisition of a 13-property portfolio leased to the USPS for approximately $7.2 million, including closing costs.  In connection, with the purchase we obtained $4.5 million of mortgage financing at a fixed interest rate of 4.25%, with interest-only payments due for the first 18 months.  The financing matures in April 2040.

● Closed on the acquisition of 6 additional postal properties leased to the USPS in individual or smaller portfolio transactions for approximately $3.4 million, including closing costs.

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Debt

● On June 8, 2020, we obtained $9.2 million mortgage financing at a fixed interest rate of 4.25%, with interest-only payments due for the first 18 months.  The financing matures in June 2040.

● 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, the restrictive covenants related to Consolidated Tangible Net Worth.

Equity

● 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.

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

The ongoing COVID-19 pandemic continues to present uncertainty and risk with respect to the Company’s operations and the operations of the USPS, which could adversely affect the Company and its financial performance Although the Company has received all of its July rents and payments due from holdover tenants and has not received any request for rent concessions as of the date of this Quarterly Report, our ability to continue to collect rents as they become due is unclear and rent concessions may be forthcoming.

In addition, while the Company has maintained its operations during the pandemic and state-mandated lock-downs, some of the Company’s operations may be negatively impacted should the duration and effects of the pandemic or state-required lock-downs become longer or more severe. Specifically, should state imposed lock-downs be re-implemented in certain areas, the Company’s ability to identify and complete property and portfolio acquisitions may be delayed or disrupted.

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 June 30, 2020, all properties leased to the USPS had an average remaining lease term of 2.41 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 executed 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). As of June 30, 2020, the leases at 43 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 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 August 11, 2020, the leases at 55 of our properties (consisting of one lease for which the lease expired in 2018 which we acquired in July 2020, 21 properties for which leases expired in 2019, including two leases that expired as of the date of our acquisition, and 33 properties for which leases expired in 2020) had expired and the USPS is occupying such properties as a holdover tenant, aggregating approximately 220,000 interior square feet and $2.4 million in annualized rental income. To date, the USPS has not vacated or notified us of its intention to vacate any of these 55 properties. When a lease expires, the USPS becomes a holdover tenant on a month-to-month basis typically paying the greater of estimated 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 some 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 have expired in 2019 or 2020 and the one lease that we acquired that expired in 2018.

As of August 11, 2020, we believe we have tentatively agreed to preliminary terms with the USPS on an addendum to its revised form of lease for leases requiring annual rent in excess of $25,000, 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 have agreed in letters of intent to preliminary terms on rental rates for 80 out of 90 properties for which leases expired or will expire in 2020 or before, including 48 of 55 properties for which leases have expired, and at which the USPS is a holdover tenant. Of the remaining ten properties with leases expired or will expire in 2020 or before, six are from properties acquired in 2020. In addition, we believe that in connection with executing revised-form leases, we will generally receive a lump sum reimbursement from the USPS for increased rents and any real estate taxes the Company paid from the date of expiration to the date of lease execution. We anticipate that we will execute new, revised-form leases for all remaining leases that have expired, and the addendum for such leases requiring annual rent in excess of $25,000. However, we have not entered into any definitive documentation with respect to this addendum, rental rates or leases for the 55 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 projected 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 June 30, 2020 and June 30, 2019

	For the Three Months Ended June 30,									%
	2020			2019(1)			$ Change			Change
Revenues
Rental income	$	4,640,403		$	1,856,428		$	2,783,975			150.0
Tenant reimbursements		652,748			273,229			379,519			138.9
Fee and other income		311,786			276,325			35,461			12.8
Total revenues		5,604,937			2,405,982			3,198,955			133.0
Operating expenses
Real estate taxes		696,865			288,771			408,094			141.3
Property operating expenses		394,434			248,586			145,848			58.7
General and administrative		1,916,905			968,032			948,873			98.0
Depreciation and amortization		2,161,782			767,772			1,394,010			181.6
Total operating expenses		5,169,986			2,273,161			2,896,825			127.4
Income from operations		434,951			132,821			302,130			227.5
Interest expense, net
Contractual interest expense		(544,915	)		(228,040	)		(316,875	)		139.0
Write-off and amortization of deferred financing fees		(115,399	)		(1,854	)		(113,545	)		>100.0
Loss on extinguishment of debt		—			(185,586	)		185,586			(100.0	)
Interest income		661			1,124			(463	)		(41.2	)
Total interest expense, net		(659,653	)		(414,356	)		(245,297	)		59.2
Loss before income tax expense		(224,702	)		(281,535	)		56,833			(20.2	)
Income tax expense		(4,925	)		(6,259	)		1,334			(21.3	)
Net loss	$	(229,627	)	$	(287,794	)	$	58,167			(20.2	)

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Explanatory Note:

(1) Includes the results of operations of the Predecessor for the period from April 1, 2019 to May 16, 2019.

Revenues

Total revenues increased by $3.2 million for the three months ended June 30, 2020 compared to the three months ended June 30, 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 for the three months ended June 30, 2020 compared to the three months ended June 30, 2019 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 June 30, 2020 compared to the three months ended June 30, 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.

Fee and other income – Fee and other income increased by $35,461, or 12.8%, to $311,786 for the three months ended June 30, 2020 from $276,325 for the three months ended June 30, 2019, primarily due to higher insurance recoveries for the three months ended June 30, 2020, offset by lower miscellaneous income. 

Operating Expenses

Real estate taxes – Real estate taxes increased by $0.4 million for the three months ended June 30, 2020 compared to the three months ended June 30, 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 $0.1 million to $0.4 million for the three months ended June 30, 2020 from $0.3 million for the three months ended June 30, 2019. The increase was a result of an increase in property management expenses of $0.02 million to $189,155 for the three months ended June 30, 2020 from $164,296 for the three months ended June 30, 2019. The remainder of the increase of $0.08 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 $0.9 million to $1.9 million for the three months ended June 30, 2020 from $1.0 million for the three months ended June 30, 2019, primarily due to higher professional fees and increased personnel and investor relations expenses as a result of being a public company. In addition, equity-based compensation expense increased by $0.3 million for the three months ended June 30, 2020 compared to the three months ended June 30, 2019 due to additional awards granted during the first quarter of 2020. Our Predecessor did not have any equity-based compensation expense.

Depreciation and amortization – Depreciation and amortization expense increased by $1.4 million to $2.2 million for the three months ended June 30, 2020 from $0.8 million for the three months ended June 30, 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.

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Interest Expense

During the three months ended June 30, 2020, we incurred interest expense of $0.7 million compared to $0.4 million for the three months ended June 30, 2019. The increase in interest expense was due to the interest paid on the $67.5 million outstanding balance on our Credit Facility. This increase is offset by a loss on early extinguishment of debt incurred in connection with the IPO.

Comparison of the six months ended June 30, 2020 and June 30, 2019

	For the Six Months Ended June 30,									%
	2020			2019(1)			$ Change			Change
Revenues
Rental income	$	8,941,174		$	3,348,814		$	5,592,360			167.0
Tenant reimbursements		1,254,094			510,085			744,009			145.9
Fee and other income		607,305			563,251			44,054			7.8
Total revenues		10,802,573			4,422,150			6,380,423			144.3
Operating expenses
Real estate taxes		1,338,809			538,560			800,249			148.6
Property operating expenses		801,482			500,292			301,190			60.2
General and administrative		4,218,448			1,344,923			2,873,525			213.7
Depreciation and amortization		4,196,650			1,248,215			2,948,435			236.2
Total operating expenses		10,555,389			3,631,990			6,923,399			190.6
Income from operations		247,184			790,160			(542,976	)		(68.7	)
Interest expense, net
Contractual interest expense		(1,273,141	)		(586,507	)		(686,634	)		117.1
Write-off and amortization of deferred financing fees		(219,861	)		(5,035	)		(214,826	)		>100.0
Loss on early extinguishment of predecessor debt		-			(185,586	)		185,586			(100.0	)
Interest income		1,487			2,258			(771	)		(34.1	)
Total interest expense, net		(1,491,515	)		(774,870	)		(716,645	)		92.5
(Loss) income before income tax expense		(1,244,331	)		15,290			(1,259,621	)		<100.0
Income tax expense		(15,122	)		(46,008	)		30,886			(67.1	)
Net loss	$	(1,259,453	)		(30,718	)		(1,228,735	)		>100.0

Explanatory Note:

(1) Includes the results of operations of the Predecessor for the period from January 1, 2019 to May 16, 2019.

Revenues

Total revenues increased by $6.4 million for the six months ended June 30, 2020 compared to the six months ended June 30, 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 $5.6 million for the six months ended June 30, 2020 compared to the six months ended June 30, 2019 and is made up of $0.4 million related to the properties purchased by our Predecessor and $5.2 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.

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Tenant reimbursements – Tenant reimbursements increased $0.7 million for the six months ended June 30, 2020 compared to the six months ended June 30, 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.

Fee and other income. Other revenue increased by $44,054, or 7.8%, to $607,289 for the six months ended June 30, 2020 from $563,251 for the six months ended June 30, 2019, primarily due to higher insurance recoveries for the six months ended June 30, 2020, offset by lower miscellaneous income. 

Operating Expenses

Real estate taxes – Real estate taxes increased by $0.8 million for the six months ended June 30, 2020 compared to the six months ended June 30, 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 $0.3 million to $0.8 million for the six months ended June 30, 2020 from $0.5 million for the six months ended June 30, 2019. The increase was a result of an increase in property management expenses of $0.1 million to $430,691 for the six months ended June 30, 2020 from $329,146 for the six months ended June 30, 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 $2.9 million to $4.2 million for the six months ended June 30, 2020 from $1.3 million for the six months ended June 30, 2019, primarily due to higher professional fees and increased personnel and investor relations expenses as a result of being a public company. In addition, equity-based compensation expense increased by $1.1 million for the six months ended June 30, 2020 compared to the six months ended June 30, 2019 due to additional compensation expense for awards that have been granted since our IPO.

Depreciation and amortization – Depreciation and amortization expense increased by $2.9 million to $4.2 million for the six months ended June 30, 2020 from $1.3 million for the six months ended June 30, 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 $30,886 to $15,122 for the six months ended June 30, 2020 from $46,008 for the six months ended June 30, 2019 and was primarily attributable to a reduction in taxable income related to UPH, offset by an increase in income tax expense related to PRM for the six months ended June 30, 2020.

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Interest Expense

During the six months ended June 30, 2020, we incurred interest expense of $1.5 million compared to $0.8 million for the six months ended June 30, 2019. The increase in interest expense is due to the interest paid on the $67.5 million outstanding balance on our Credit Facility. This increase is offset by a loss on early extinguishment of debt incurred in connection with the IPO.

Cash Flows

Comparison of the six months ended June 30, 2020 and the six months ended June 30, 2019

The Company had $4.9 million of cash and $0.7 million of escrows and reserves as of June 30, 2020 compared to $11.7 million of cash and $0.6 million of escrows and reserves as of June 30, 2019.

Cash flow from operating activities – Net cash provided by operating activities increased by $2.3 million to $3.2 million for the six months ended June 30, 2020 compared to $0.9 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 from investing activities – Net cash used in investing activities increased by $7.1 million to $34.3 million for the six months ended June 30, 2020 compared to $27.2 million for the same period in 2019. The increase was primarily due to the acquisition of postal properties during the six months ended June 30, 2020.

Cash flow from financing activities – Net cash provided by financing activities decreased by $14.3 million to $23.5 million for the six months ended June 30, 2020 compared to $37.8 million for the same period in 2019. This decrease was primarily due to the proceeds from the IPO during the six months ended June 30, 2019 offset by higher net borrowings during the six months ended June 30, 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 beginning with Q2 2020 as a policy change all capital improvements that are planned at 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 June 30, 2020
Net loss	$	(229,627	)
Depreciation and amortization of real estate assets		2,161,782
FFO	$	1,932,155
Recurring capital expenditures		(123,375	)
Acquisition related expenses		51,345
Amortization of debt issuance costs		115,399
Straight-line rent adjustments		(36,284	)
Amortization of above and below market leases		(293,287	)
Non-cash stock compensation expense		534,580
AFFO	$	2,180,533

Liquidity and Capital Resources

Analysis of Liquidity and Capital Resources

We had approximately $4.9 million of cash and $0.7 million of escrows and reserves as of June 30, 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 executed lease. As of June 30, 2020, we had $67.5 million outstanding under our Credit Facility. Also, as of June 30, 2020, the leases at 43 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. We believe that we have agreed to preliminary terms regarding re-leasing 40 of these properties. 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).

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. 

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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. 

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 June 30, 2020

As of June 30, 2020, we had approximately $84.3 million of outstanding consolidated principal indebtedness. The following table sets forth information as of June 30, 2020 with respect to the outstanding indebtedness of the Company:

	Amount Outstanding as of		Interest Rate at
	June 30,		June 30,
	2020		2020			Maturity Date
Credit Facility(1)	$	67,469,056		LIBOR+170bps	(2)	September 2023
Vision Bank(3)		1,490,882		4.00	%	September 2036
First Oklahoma Bank(4)		371,120		4.50	%	December 2037
Vision Bank – 2018(5)		884,739		5.00	%	January 2038
Seller Financing(6)		445,000		6.00	%	January 2025
First Oklahoma Bank – April 2020(7)		4,522,311		4.25	%	April 2040
First Oklahoma Bank – June 2020(8)		9,152,000		4.25	%	June 2040
Total Principal	$	84,335,108

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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.  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. 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. As of June 30, 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 continued compliance with a number of customary affirmative and negative covenants. As of June 30, 2020, we were in compliance with all of the Credit Facility’s debt covenants. As of the date of this filing, $39.5 million is outstanding under the Credit Facility.

(2) As of June 30, 2020, the one-month LIBOR rate was 0.16%.

(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.

(7) In connection with the purchase of a 13-building portfolio, 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.

(8) The loan is collateralized by first mortgage liens on 22 properties. Interest rates resets in January 2027 to the greater of Prime or 4.25%. The financing matures in June 2040.

Secured Borrowings as of June 30, 2020

As of June 30, 2020, we had approximately $16.9 million of secured borrowings outstanding, all of which was fixed rate debt with a weighted average interest rate of 4.3% 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 and six months ended June 30, 2020, we paid cash dividends of $0.20 and $0.37 per share, respectively. On July 30, 2020, our Board of Directors approved and we declared a second quarter common stock dividend of $0.205 per share which is payable on August 31, 2020 to stockholders of record on August 14, 2020.

Subsequent Real Estate Acquisitions

As of August 11, 2020, we purchased 98 postal properties for approximately $23.4 million during the period subsequent to June 30, 2020.

31

Acquisition Pipeline

As of August 11, 2020, we had entered into definitive agreements to acquire postal properties for a purchase price of approximately $3.7 million. The majority of these transactions are anticipated to close by the end of 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.

Off-Balance Sheet Arrangements

As of June 30, 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.

32

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 June 30, 2020, our total indebtedness was approximately $84.3 million, consisting of approximately $67.5 million of variable-rate debt and approximately $16.8 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 $337,000 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.

33

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 and our Quarterly Report on Form 10-Q for the quarter ended March 31, 2020.

The following risk factors are intended to supplement the risk factors previously disclosed.

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.

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.

34

As of August 11, 2020, the leases at 55 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 August 11, 2020, the leases at 55 of our properties (consisting of one lease for which the lease expired in 2018 which we acquired in July 2020, 21 properties for which leases expired in 2019, including two leases that expired as of the date of our acquisition, and 33 properties for which leases expired in 2020) had expired and the USPS is occupying such properties as a holdover tenant, aggregating approximately 220,000 interior square feet and $2.4 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 estimated 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 55 properties. Due to the fact that the USPS is occupying 55 of our properties as a holdover tenant, such properties are currently excluded from being part of the borrowing base under our Credit Facility.

As of August 11, 2020, we believe we have tentatively agreed to preliminary terms with the USPS on an addendum to its revised form of lease for leases acquiring annual rent in excess of $25,000, 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 have agreed in letters of intent to preliminary terms on rental rates for 80 out of 90 properties for which leases expired or will expire in 2020 or before, including 48 of 55 properties for which leases have expired, and at which the USPS is a holdover tenant. Of the remaining ten properties with leases expired or will expire in 2020 or before, six are from properties acquired in 2020. We anticipate that we will execute new, revised-form leases for all remaining leases that have expired, and the addendum for such leases requiring annual rent in excess of $25,000. However, we have not entered into any definitive documentation with respect to this addendum, rental rates or leases for the 55 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.

Changes in leadership and strategy within the USPS may disrupt our business, which could have a material effect on our operations, financial position and results of operations.

In May 2020, the USPS Board of Governors unanimously appointed Louis DeJoy as the Postmaster General. DeJoy took office on June 15, 2020. As of August 7, 2020, the USPS has reassigned or displaced twenty-three postal executives including two executives overseeing day-to-day operations. The USPS has also implemented a management hiring freeze and will be requesting future Voluntary Early Retirement Authority from the Office of Personnel Management for certain employees not represented by a collective bargaining agreement. Postmaster General DeJoy, in a memo to employees, directed USPS workers to leave mail at distribution centers if delays occurred, stating that the distribution centers will have to keep the mail for additional days, if necessary. Additionally, memoranda from the Postmaster General have prohibited the use of overtime to deliver mail and limited the ability of local postmasters to hire additional staff. These changes are being made in an effort to reduce costs and it is possible that the USPS will implement additional changes to reduce expenses.

In the wake of the pandemic, there has been an increase in the number of packages the USPS has shipped, largely stemming from an increase in e-commerce transactions. The USPS has estimated that week-to-week package deliveries increased between twenty and fifty percent in April, and between sixty and eighty percent in May. Additionally, the number of absentee ballots used in the November 2020 election is expected to increase compared to the 2016 election, wherein nearly a quarter of the 136 million presidential ballots were mailed in. If, as a result of backlogs or political accusations, the USPS were to suffer reputational harm, the demand for USPS services may decline, which may lead to reduced demand for USPS properties. The results of these changes or any future changes could lead to additional delays or financing shortfalls for the USPS.

The extent to which these changes will affect our business, liquidity, financial condition, and results of operations, will depend on numerous evolving factors that we may not be able to accurately predict or assess. The USPS is subject to legislative and other constraints which may affect its ability to maintain adequate liquidity to sustain its current operations, which may result in the USPS reducing its number of post office locations and adversely affecting our business and results of operations.

35

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

None.

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

Item 6. Exhibits

Exhibit	Exhibit Description
10.1	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).†
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 (incorporated by reference to Exhibit 10.2 to the Registrant’s Quarterly Report on Form 10-Q filed on June 26, 2020).
10.3	Amendment No. 1 to the Postal Realty Trust, Inc. 2019 Equity Incentive Plan, effective as of June 26, 2020 (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed on July 1, 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 June 30, 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: August 13, 2020	By:	/s/ Andrew Spodek
		Andrew Spodek
		Chief Executive Officer
		(Principal Executive Officer)
Date: August 13, 2020	By:	/s/ Jeremy Garber
		Jeremy Garber
		President, Treasurer and Secretary
		(Principal Financial Officer)

37

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 June 30, 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 flows 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 our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us 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 our 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: August 13, 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 June 30, 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 flows 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 our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us 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 our 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: August 13, 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 June 30, 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: August 13, 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 June 30, 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: August 13, 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

Document and Entity Information - shares	6 Months Ended
	Jun. 30, 2020	Aug. 11, 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	Jun. 30, 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		9,449,352
Document Fiscal Period Focus	Q2
Document Fiscal Year Focus	2020

XML

Consolidated Balance Sheets - USD ($)	Jun. 30, 2020	Dec. 31, 2019
Real estate properties
Land	$ 32,528,667	$ 25,147,732
Building and improvements	125,168,945	92,873,637
Tenant improvements	2,910,913	2,562,293
Total real estate properties	160,608,525	120,583,662
Less: Accumulated depreciation	(10,735,163)	(8,813,579)
Total real estate properties, net	149,873,362	111,770,083
Cash	4,895,427	12,475,537
Rent and other receivables	1,991,301	1,710,314
Prepaid expenses and other assets, net	4,667,105	2,752,862
Escrow and reserves	714,251	708,066
Deferred rent receivable	87,035	33,344
In-place lease intangibles, net	8,258,395	7,315,867
Above market leases, net	22,590	22,124
Total Assets	170,509,466	136,788,197
Liabilities:
Secured borrowings, net	16,623,546	3,211,004
Revolving credit facility	67,469,056	54,000,000
Accounts payable, accrued expenses and other	4,236,786	3,152,799
Below market leases, net	7,639,889	6,601,119
Total Liabilities	95,969,277	66,964,922
Commitments and Contingencies
Equity:
Class A common stock, par value $0.01 per share; 500,000,000 shares authorized, 5,423,861 and 5,285,904 shares issued and outstanding as of June 30, 2020 and December 31, 2019, respectively	54,239	52,859
Class B common stock, par value $0.01 per share; 27,206 shares authorized: 27,206 shares issued and outstanding as of June 30, 2020 and December 31, 2019	272	272
Additional paid-in capital	54,351,945	51,396,226
Accumulated deficit	(5,416,113)	(2,575,754)
Total Stockholders' Equity	48,990,343	48,873,603
Operating Partnership unitholders' non-controlling interests	25,549,846	20,949,672
Total Equity	74,540,189	69,823,275
Total Liabilities and Equity	$ 170,509,466	$ 136,788,197

XML

Consolidated Balance Sheets (Parenthetical) - $ / shares	Jun. 30, 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	5,423,861	5,285,904
Common stock, shares outstanding	5,423,861	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 Operations (Unaudited) - USD ($)	3 Months Ended			6 Months Ended
	Jun. 30, 2020		Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019
Revenues:
Rental income	$ 4,640,403		$ 1,856,428	$ 8,941,174	$ 3,348,814
Tenant reimbursements	652,748		273,229	1,254,094	510,085
Fee and other income	311,786		276,325	607,305	563,251
Total revenues	5,604,937		2,405,982	10,802,573	4,422,150
Operating expenses:
Real estate taxes	696,865		288,771	1,338,809	538,560
Property operating expenses	394,434		248,586	801,482	500,292
General and administrative	1,916,905		968,032	4,218,448	1,344,923
Depreciation and amortization	2,161,782		767,772	4,196,650	1,248,215
Total operating expenses	5,169,986		2,273,161	10,555,389	3,631,990
Income from operations	434,951		132,821	247,184	790,160
Interest expense, net:
Contractual interest expense	(544,915)		(228,040)	(1,273,141)	(586,507)
Write-off and amortization of deferred financing fees	(115,399)		(1,854)	(219,861)	(5,035)
Loss on early extinguishment of predecessor debt			(185,586)		(185,586)
Interest income	661		1,124	1,487	2,258
Total interest expense, net	(659,653)		(414,356)	(1,491,515)	(774,870)
(Loss) income before income tax expense	(224,702)		(281,535)	(1,244,331)	15,290
Income tax expense	(4,925)		(6,259)	(15,122)	(46,008)
Net loss	(229,627)		(287,794)	(1,259,453)	(30,718)
Net income attributable to non-controlling interest in properties			(1,493)		(4,336)
Net income attributable to Predecessor			(209,181)		(463,414)
Net loss attributable to Operating Partnership unitholders' non-controlling interests	79,077		106,672	431,148	106,672
Net loss attributable to common stockholders	$ (150,550)		$ (391,796)	$ (828,305)	$ (391,796)
Net loss per share:
Basic and Diluted	$ (0.05)		$ (0.08)	$ (0.19)	$ (0.08)
Weighted average common shares outstanding:
Basic and Diluted	5,205,153	[1]	5,164,264	5,189,900	5,164,264

[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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Consolidated and Combined Consolidated Statements of Changes in Equity (Deficit) (Unaudited) - USD ($)	Common Stock	Common Stock Predecessor	Additional Paid-in Capital	Additional Paid-in Capital Predecessor	Accumulated Equity (Deficit)	Accumulated Equity (Deficit) Predecessor	Member's Equity (Deficit)	Member's Equity (Deficit) Predecessor	Total Stockholders' & Predecessor equity	Total Stockholders' & Predecessor equity Predecessor	Operating Partnership unitholders' non-controlling interests	Operating Partnership unitholders' non-controlling interests Predecessor	Non-controlling interests in properties	Non-controlling interests in properties Predecessor	Total	Predecessor
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)
Beginning Balance, Shares at Dec. 31, 2018
Net income (loss)						(173,554)		427,787		254,233				2,843		257,076
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)
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)
Ending Balance, Shares at Mar. 31, 2019
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)
Beginning Balance, Shares at Dec. 31, 2018
Net income (loss)																467,750
Ending Balance at May. 16, 2019	$ 4,000,200		$ 3,139,423		$ (11,174,220)		$ (1,168,623)		$ (5,203,220)				$ 42,741		$ (5,160,479)
Ending Balance, Shares at May. 16, 2019
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)
Beginning Balance, Shares at Dec. 31, 2018
Net income (loss)															(30,718)
Ending Balance at Jun. 30, 2019		$ 53,128		46,250,914		(726,502)				45,577,540		12,409,152				57,986,692
Ending Balance, Shares at Jun. 30, 2019		5,312,793
Beginning 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, Shares at Mar. 31, 2019
Net income (loss)						3,210		205,971		209,181				1,493		210,674
Capital contributions								293,373		293,373						293,373
Distributions and dividends				(549,191)				(310,174)		(859,365)				(5,667)		(865,032)
Ending Balance at May. 16, 2019	$ 4,000,200		3,139,423		(11,174,220)		(1,168,623)		(5,203,220)				42,741		(5,160,479)
Ending Balance, Shares at May. 16, 2019
Beginning 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, Shares at Mar. 31, 2019
Net income (loss)															(287,794)
Ending Balance at Jun. 30, 2019		$ 53,128		46,250,914		(726,502)				45,577,540		12,409,152				57,986,692
Ending Balance, Shares at Jun. 30, 2019		5,312,793
Beginning Balance at May. 16, 2019	$ 4,000,200		3,139,423		(11,174,220)		(1,168,623)		(5,203,220)				42,741		(5,160,479)
Beginning Balance, Shares at May. 16, 2019
Issuance and amortization of equity-based compensation		$ 1,485		126,755						128,240		62,103				190,343
Issuance and amortization of equity-based compensation, Shares		148,529
Dividends declared						(334,706)				(334,706)		(91,213)				(425,919)
Net income (loss)						(391,796)				(391,796)		(106,672)				(498,468)
Reallocation of non-controlling interest				10,117,974						10,117,974		(10,117,974)
Net proceeds from sale of Common Stock		$ 45,000		64,665,261						64,710,261						64,710,261
Net proceeds from sale of Common Stock, Shares		4,500,000
Formation transactions		$ (3,993,557)		(31,798,499)		11,174,220		1,168,623		(23,449,213)		22,662,907		(42,741)		(829,047)
Formation transactions, Shares		664,264
Ending Balance at Jun. 30, 2019		$ 53,128		$ 46,250,914		$ (726,502)				$ 45,577,540		$ 12,409,152				$ 57,986,692
Ending Balance, Shares at Jun. 30, 2019		5,312,793
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 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					(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)
Issuance of OP Units in connection with transaction											7,921,828				7,921,828
Issuance of OP Units in connection with transaction, Shares
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
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
Net income (loss)															(1,259,453)
Ending Balance at Jun. 30, 2020	$ 54,511		54,351,945		(5,416,113)				48,990,343		25,549,846				74,540,189
Ending Balance, Shares at Jun. 30, 2020	5,451,066
Beginning Balance at Mar. 31, 2020	$ 54,201		54,187,591		(4,176,857)				50,064,935		26,007,069				76,072,004
Beginning Balance, Shares at Mar. 31, 2020	5,420,111
Issuance and amortization of equity-based compensation	$ 423		351,248						351,671		181,352				533,023
Issuance and amortization of equity-based compensation, Shares	42,297
Amortization under ESPP			1,557						1,557						1,557
Amortization under ESPP, Shares
Restricted stock withholding	$ (113)		(182,402)						(182,515)						(182,515)
Restricted stock withholding, Shares	(11,342)
Dividends declared					(1,088,706)				(1,088,706)		(565,547)				(1,654,253)
Net income (loss)					(150,550)				(150,550)		(79,077)				(229,627)
Reallocation of non-controlling interest			(6,049)						(6,049)		6,049
Ending Balance at Jun. 30, 2020	$ 54,511		$ 54,351,945		$ (5,416,113)				$ 48,990,343		$ 25,549,846				$ 74,540,189
Ending Balance, Shares at Jun. 30, 2020	5,451,066

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Consolidated and Combined Consolidated Statements of Changes in Equity (Deficit) (Unaudited) (Parenthetical)	6 Months Ended
	Jun. 30, 2020 $ / shares
Statement of Stockholders' Equity [Abstract]
Dividends declared per share	$ 0.17

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Consolidated and Combined Consolidated Statements of Cash Flows (Unaudited) - USD ($)	6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019
Cash flows from operating activities:
Net loss	$ (1,259,453)	$ (30,718)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation	1,969,299	612,135
Amortization of in-place intangibles	2,227,351	636,080
Write-off and amortization of deferred financing costs	219,861	5,035
Amortization of above/below market leases	(609,562)	(190,828)
Amortization of intangible liability	(2,762)
Equity based compensation	1,248,278	190,343
Loss on extinguishment debt		185,586
Deferred rent receivable	(53,691)	(9,804)
Deferred rent expense payable	9,470	(44,156)
Deferred tax liability		(65,895)
Changes in assets and liabilities:
Rent and other receivables	(280,987)	(519,503)
Prepaid expenses and other assets	(361,717)	(117,106)
Due to affiliates		63,879
Accounts payable, accrued expenses and other	101,147	146,944
Net cash provided by operating activities	3,207,234	861,992
Cash flows from investing activities:
Acquisition of real estate	(33,212,115)	(26,908,804)
Acquisition and other deposits	(639,501)	(280,000)
Capital improvements	(341,446)	(25,695)
Other investing activities	(72,900)
Net cash used in investing activities	(34,265,962)	(27,214,499)
Cash flows from financing activities:
Proceeds from secured borrowings	13,674,311
Repayments of secured borrowings	(54,322)	(32,165,494)
Proceeds from revolving credit facility	20,000,000
Repayments of revolving credit facility	(6,530,944)
Proceeds from other financing activity	557,000
Repayments from other financing activity	(191,597)
Net proceeds from issuance of shares		69,684,886
Other formation transactions		(163,204)
Debt issuance costs	(766,704)
Proceeds from issuance of shares	44,650
Shares withheld for payment of taxes on restricted share vesting	(182,402)
Contributions from partners and members		2,068,252
Distributions and dividends	(3,055,986)	(1,587,664)
Other financing activities	(9,203)
Net cash provided by financing activities	23,484,803	37,836,776
Net (decrease) increase in Cash and Escrows and Reserves	(7,573,925)	11,484,269
Cash and Escrows and Reserves at the beginning of period	13,183,603
Cash and Escrow and Reserves at the end of period	$ 5,609,678	12,346,144
Predecessor
Cash flows from financing activities:
Cash and Escrows and Reserves at the beginning of period		$ 861,875

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Organization and Description of Business

6 Months Ended

Jun. 30, 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 June 30, 2020, the Company held an approximately 65.7% 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 June 30, 2020, the Company owned a portfolio of 568 postal properties located in 47 states. Our properties were leased to a single tenant, the United States Postal Service (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 400 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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The Company's IPO and Formation Transactions

6 Months Ended

Jun. 30, 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.

The Company’s results of operations for the three and six months ended June 30, 2019 reflect the results of operations of the Predecessor together with the Company, while the financial condition as of December 31, 2019 and June 30, 2020 reflects solely 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.

The following is a summary of the Predecessor Statement of Operations for the period from April 1, 2019 through May 16, 2019 and for the period from January 1, 2019 through May 16, 2019, and the Company’s Statement of Operations for the period from May 17, 2019 through June 30, 2019. These amounts are included in the consolidated and combined consolidated statement of operations herein for the three and six months ended June 30, 2019.

	Predecessor						Postal Realty Trust, Inc.
	April 1,			January 1,			May 17,
	2019			2019			2019
	through			through			through
	May 16,			May 16,			June 30,
	2019			2019			2019
Revenues:
Rental income	$	756,969		$	2,249,355		$	1,099,459
Tenant reimbursements		111,219			348,075			162,010
Fee and other income		141,033			427,959			135,292
Total revenues		1,009,221			3,025,389			1,396,761
Operating Expenses:
Real estate taxes		117,723			367,512			171,048
Property operating expenses		115,010			366,716			133,576
General and administrative		106,557			483,448			861,475
Depreciation and amortization		245,313			725,756			522,459
Total operating expenses		584,603			1,943,432			1,688,558
Income (loss) from operations		424,618			1,081,957			(291,797	)
Interest expense, net:
Contractual interest expense		(212,352	)		(570,819	)		(15,688	)
Amortization of deferred financing costs		(1,592	)		(4,773	)		(262	)
Loss on early extinguishment of Predecessor debt		-			-			(185,586	)
Interest income		-			1,134			1,124
Total interest expense, net		(213,944	)		(574,458	)		(200,412	)
Income (loss) before income tax expense		210,674			507,499			(492,209	)
Income tax expense		-			(39,749	)		(6,259	)
Net income (loss)		210,674			467,750			(498,468	)
Less:
Net income attributable to noncontrolling interest in properties		(1,493	)		(4,336	)		-
Net income attributable to Predecessor	$	209,181		$	463,414			-
Net loss attributable to Operating Partnership unitholders’ noncontrolling interests								106,672
Net loss attributable to common stockholders							$	(391,796	)

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Summary of Significant Accounting Policies

6 Months Ended

Jun. 30, 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.

Reclassifications

Certain prior period amounts have been reclassified to conform to the current period’s presentation.

Cash and Escrows and Reserves

Cash includes unrestricted cash with a maturity of three months or less. Escrows and reserves consists 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
	June 30, 2020		December 31, 2019
Cash	$	4,895,427	$	12,475,537
Escrows and reserves:
Maintenance reserve		664,825		663,339
ESPP reserve		49,426		44,727
Cash and escrows and reserves	$	5,609,678	$	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 June 30, 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 June 30, 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 $16.9 million and $3.2 million as compared to the principal balance of $16.9 million and $3.2 million as of June 30, 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 June 30, 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 June 30, 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 and six months ended June 30, 2020 and 2019. 

Concentration of Credit Risks 

As of June 30, 2020, the Company’s properties were leased to a single tenant, the USPS. For the six months ended June 30, 2020, no state had a concentration of rental income over 10% as a percentage of total rental income. For the six months ended June 30, 2019, our total rental income of $3.3 million was concentrated in the following states: Texas (12.7%), Massachusetts (12.3%), Wisconsin (10.9%) and Pennsylvania (10.2%). 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 2,855,102 potentially dilutive shares outstanding related to the issuance of OP Units and LTIP Units held by non-controlling interests as of June 30, 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 June 30, 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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Real Estate Acquisitions

6 Months Ended

Jun. 30, 2020

Real Estate [Abstract]

Real Estate Acquisitions

Note 4. Real Estate Acquisitions

The following tables summarizes the Company’s acquisitions for the six months ended June 30, 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 acquisition. 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	$	4,825,507	$	24,572,597	$	293,726	$	2,477,174	$	7,148	$	(1,616,080	)	$	(34,098	)	$	30,525,974
June 30, 2020(6)		19		2,555,428		7,344,021		54,894		692,705		-		(38,934	)		-			10,608,114
		102	$	7,380,935	$	31,916,618	$	348,620	$	3,169,879	$	7,148	$	(1,655,014	)	$	(34,098	)	$	41,134,088

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 and $0.2 million for the three months ended June 30, 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.

(6) Includes the acquisition of a 13-building portfolio leased to the USPS in various states for approximately $7.2 million, including closing costs. In addition, the Company purchased six postal properties in individual or smaller portfolio transactions for approximately $3.4 million, including closing costs.

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Intangible Assets and Liabilities

6 Months Ended

Jun. 30, 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
June 30, 2020:
In-place lease intangibles	$	16,957,903		$	(8,699,508	)	$	8,258,395
Above-market leases		47,768			(25,178	)		22,590
Below-market leases		(10,327,315	)		2,687,426			(7,639,889)
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 $2.2 million for the three and six months ended June 30, 2020, respectively and $0.4 million and $0.6 million for the three and six months ended June 30, 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 $3,576 and $6,682 for the three and six months ended June 30, 2020, respectively, and $2,616 and $4,986 for the three and six months ended June 30, 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 $0.6 million for the three and six months ended June 30, 2020, respectively, and $0.1 million and $0.2 million for the three and six months ended June 30, 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	$	1,945,917	$	5,889	$	(529,407	)
2021		2,968,481		6,717		(1,004,488	)
2022		1,549,204		5,774		(893,108	)
2023		917,586		3,139		(811,708	)
2024		452,078		1,071		(721,221	)
Thereafter		425,129		-		(3,679,957	)
Total	$	8,258,395	$	22,590	$	(7,639,889	)

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Debt

6 Months Ended

Jun. 30, 2020

Debt Disclosure [Abstract]

Debt

Note 6. Debt

The following table summarizes the Company’s indebtedness as of June 30, 2020 and December 31, 2019:

	Outstanding Balance as of June 30, 2020			Outstanding Balance as of December 31, 2019			Interest Rate at June 30, 2020			Maturity Date
Revolving Credit Facility(1)	$	67,469,056		$	54,000,000			LIBOR+170bps	(2)	September 2023
Vision Bank(3)		1,490,882			1,522,672			4.00	%	September 2036
First Oklahoma Bank(4)		371,120			378,005			4.50	%	December 2037
Vision Bank – 2018(5)		884,739			900,385			5.00	%	January 2038
Seller Financing(6)		445,000			445,000			6.00	%	January 2025
First Oklahoma Bank – April 2020(7)		4,522,311			-			4.25	%	April 2040
First Oklahoma Bank – June 2020(8)		9,152,000			-			4.25	%	June 2040
Total Principal		84,335,108			57,246,062
Unamortized deferred financing costs		(242,506	)		(35,058	)
Total Debt	$	84,092,602		$	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. 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 First Oklahoma Bank-June 2020 secured mortgage financing.  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 and six months ended June 30, 2020, the Company incurred $0.1 million and $0.2 million, respectively, 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 June 30, 2020, the Company was in compliance with all of the Credit Facility’s debt covenants.

(2) As of June 30, 2020, the one-month LIBOR rate was 0.16%.

(3) Five properties are collateralized under this loan as of June 30, 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.

(7) In connection with the purchase of a 13-building portfolio, 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.

(8) The loan is collateralized by first mortgage liens on 22 properties. Interest rates resets in January 2027 to the greater of Prime or 4.25%. The financing matures in June 2040.

The scheduled principal repayments of indebtedness as of June 30, 2020 are as follows:

Year Ending December 31,	Amount
2020 – Remaining	$	55,189
2021		220,587
2022		701,225
2023		68,204,893
2024		767,852
Thereafter		14,385,362
Total	$	84,335,108

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Leases

6 Months Ended

Jun. 30, 2020

Leases, Operating [Abstract]

Leases

Note 7. Leases

As of June 30, 2020, all of the properties owned by the Company were occupied by a single tenant, 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 June 30, 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)	$	7,578,190
2021		14,219,786
2022		10,753,252
2023		8,248,719
2024		5,703,053
Thereafter		7,326,944
Total	$	53,829,944

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 June 30, 2020, the leases at 43 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. Holdover rent is paid as the greater of market rent or the rent amount due under the expired lease.

Impact of COVID-19

On March 11, 2020, the World Health Organization declared the outbreak of a coronavirus (COVID-19) a pandemic. The resulting restrictions on travel and quarantines imposed have had a negative impact on the U.S. economy and business activity globally, the full impact of which is not yet known and may result in an adverse impact to the Company’s tenant and operating results.

During the six months ended June 30, 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	$	11,200
2021		22,400
2022		22,400
2023		22,400
2024		22,960
Thereafter		1,159,690
Total	$	1,261,050

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Income Taxes

6 Months Ended

Jun. 30, 2020

Income Tax Disclosure [Abstract]

Income Taxes

Note 8. Income Taxes

Income tax expense related to UPH for the three and six months ended June 30, 2019 was zero and $39,749 at an effective tax rate of 13.4%. The effective tax rate for the three months and six months ended June 30, 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. During the three and six months ended June 30, 2020, the Company recorded a benefit of $9,657 due to finalizing certain state taxes filings of UPH.

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 and six months ended June 30, 2020, income tax expense related to PRM was $14,582 and $24,779, respectively.

The Company has unrecognized tax benefits as of June 30, 2020 of $0.5 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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Related Party Transactions

6 Months Ended

Jun. 30, 2020

Related Party Transactions [Abstract]

Related Party Transactions

Note 9. Related Party Transactions

Management Fee Income

PRM recognized management fee income of $0.2 million and $0.5 million for the three and six months ended June 30, 2020, respectively and the Predecessor recognized management fee income of $0.1 million and $0.4 million for the three and six months ended June 30, 2019 from various properties which were affiliated with Mr. Spodek. Following the IPO, PRM recognized management fee income of $0.1 million for the three and six months ended June 30, 2019 from various properties which are affiliated with the Company's CEO. 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 June 30, 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 and six months ended June 30, 2020 was $47,782 and $95,564, respectively, was recorded in "General and administrative expenses" on the Company's Consolidated and Combined Consolidated Statements of Operations.

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

Year Ending December 31,	Amount
2020 – Remaining	$	84,975
2021		188,869
2022		194,535
2023		200,371
2024		76,244
Total	$	744,994

Transfer of Real Property

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.

Guarantees

Mr. Spodek, our chief executive officer, has personally guaranteed our loans with First Oklahoma Bank that were obtained prior to 2020 and Vision Bank, totaling $2.7 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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Earnings Per Share

6 Months Ended

Jun. 30, 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 June 30,						For the Six Months Ended June 30,
	2020			2019			2020			2019
Numerator for earnings per share – basic and diluted:
Net loss attributable to common stockholders	$	(150,550	)	$	(391,796	)	$	(828,305	)	$	(391,796	)
Less: Income attributable to participating securities		(89,316	)		(16,715	)		(160,851	)		(16,715	)
Numerator for earnings per share — basic and diluted	$	(239,866	)	$	(408,511	)	$	(989,156	)	$	(408,511	)
Denominator for earnings per share – basic and diluted		5,205,153			5,164,264			5,189,900			5,164,264
Basic and diluted earnings per share	$	(0.05	)	$	(0.08	)	$	(0.19	)	$	(0.08	)

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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Stockholder's Equity

6 Months Ended

Jun. 30, 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 and six months ended June 30, 2020, the Board approved and the Company declared and paid dividends of $1.7 million and $3.1 million, respectively, to Class A common stockholders, Voting Equivalency stockholders, OP unitholders and LTIP unitholders, or $0.37 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
April 30, 2020	May 11, 2020	May 29, 2020	$	0.20

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. During the six months ended June 30, 2020, the Company issued 483,333 OP Units in January 2020 in connection with a portfolio that the Company acquired, 53,230 LTIP Units in February 2020 to the Company's CEO for his 2019 incentive bonus, 13,708 LTIP Units in March 2020 to the Company's CEO and 27,365 LTIP Units in May 2020 to the Company's CEO for his salary for the period of May 18, 2020 to December 31, 2020.

As of June 30, 2020, and December 31, 2019, non-controlling interests consisted of 2,640,795 OP Units and 214,307 LTIP Units and 2,157,462 OP Units and 120,004 LTIP Units, respectively. This represented approximately 34.3% and 30.0% of the outstanding Operating Partnership units as of June 30, 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. On April 27, 2020, the Board of Directors amended the Equity Incentive Plan to increase the total number of shares of Class A common stock that may be issued under the Plan from 541,584 shares to 1,291,584 shares. The stockholders approved such amendment on June 26, 2020. As of June 30, 2020, the remaining shares available under the Plan for future issuance was 751,697. 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  June 30, 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, as of January 1, 2020		148,847			120,003		—		268,850		$	16.96
Granted		146,348			94,303		62,096		302,747		$	14.20
Vesting of restricted shares (5)		(61,181	)		—		—		(61,181	)	$	17.00
Forfeited		(588	)		—		—		(588	)	$	17.00
Outstanding, as of June 30, 2020		233,426			214,306		62,096		509,828		$	15.35

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 six months ended June 30, 2020, 2,843 LTIPs issued to an employee vested as a result of a modification of the award and 13,708 LTIPs to the Company's CEO. 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 six months ended June 30, 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.

(5) Includes 49,839 of restricted shares that vested and 11,342 shares of restricted shares that were withheld to satisfy minimum statutory withholding requirements.

During the three and six months ended June 30, 2020, the Company recognized compensation expense of $0.5 million and $1.2 million, respectively, and during the three and six months ended June 30, 2019 the Company recognized $0.2 million, related to all awards which is recorded in "General and administrative" on the Company's Consolidated and Combined Consolidated Statements of Operations.

The fair value of restricted shares that vested during the six months ended June 30, 2020 was $1.0 million. As of June 30, 2020, there was $6.6 million of total unrecognized compensation cost related to unvested awards, which is expected to be recognized over a weighted average period of 4.25 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 June 30, 2020, 3,538 shares have been issued under the ESPP since commencement. During the three and six months ended June 30, 2020, the Company recognized compensation expense of $1,557 and $10,102 which is recorded in "General and administrative" on the Company's Consolidated and Combined Consolidated Statements of Operations.

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Commitments and Contingencies

6 Months Ended

Jun. 30, 2020

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

Note 12. Commitments and Contingencies

As of June 30, 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.

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Subsequent Events

6 Months Ended

Jun. 30, 2020

Subsequent Events [Abstract]

Subsequent Events

Note 13. Subsequent Events

On July 8, 2020, the Company borrowed an additional $4.5 million under the Credit Facility.

On July 15, 2020, the Company priced a public offering of 3.5 million shares of its Class A Common Stock (the "Follow-on Offering") at $13.00 per share. On July 17, 2020, the underwriters purchased an additional 521,840 shares pursuant to a 30-day option to purchase up to an additional 525,000 shares at $13.00 per share (the "Additional Shares"). The Follow-on Offering, including the Additional Shares, closed on July 20, 2020 resulting in $52.2 million in gross proceeds, and approximately $49.4 million in net proceeds after deducting approximately $2.9 million in underwriting discounts and before giving effect to $0.9 million in other estimated expenses relating to the Follow-on Offering.

On July 17, 2020, the Company borrowed an additional $6.5 million under the Credit Facility.

On July 24, 2020, the Company paid down approximately $42.0 million under the Credit Facility with a portion of the proceeds received from the Follow-on Offering.

On July 30, 2020, the Company's Board of Directors approved, and the Company declared a second quarter common stock dividend of $0.205 per share which is payable on August 31, 2020 to stockholders of record as of August 14, 2020.

On August 7, 2020, the Company borrowed an additional $3.0 million under the Credit Facility. Currently, the Company had $39.5 million drawn on its Credit Facility.

As of August 11, 2020, we purchased 98 postal properties for approximately $23.4 million during the period subsequent to June 30, 2020.

As of August 11, 2020, the Company had entered into definitive agreements to acquire postal properties leased to the USPS for approximately $3.7 million. Formal due diligence has been completed and the majority of these transactions are 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 August 11, 2020, the leases at 55 of our properties (consisting of one lease for which the lease expired in 2018 which we acquired in July 2020, 21 properties for which leases expired in 2019, including two leases that expired as of the date of our acquisition, and 33 properties for which leases expired in 2020) had expired and the USPS is occupying such properties as a holdover tenant, representing an aggregate annualized rental income of $2.4 million. As of the date of this report, the USPS has not vacated or notified us of its intention to vacate any of these 55 properties. The Company has received all holdover rent on a month to month basis, with the USPS paying the greater of estimated market rent or the rent amount due 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. As of the date of this report, we have not renewed or entered into revised leases for any of our leases with the USPS that are currently in holdover. In addition, we have not entered into any definitive agreement or addendum with to respect to the leases at the properties for which the USPS occupies as a holdover tenant.

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Summary of Significant Accounting Policies (Policies)

6 Months Ended

Jun. 30, 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.

Reclassifications

Reclassifications

Certain prior period amounts have been reclassified to conform to the current period's presentation.

Cash and Escrows and Reserves

Cash and Escrows and Reserves

Cash includes unrestricted cash with a maturity of three months or less. Escrows and reserves consists 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
	June 30, 2020		December 31, 2019
Cash	$	4,895,427	$	12,475,537
Escrows and reserves:
Maintenance reserve		664,825		663,339
ESPP reserve		49,426		44,727
Cash and escrows and reserves	$	5,609,678	$	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 June 30, 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 June 30, 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 $16.9 million and $3.2 million as compared to the principal balance of $16.9 million and $3.2 million as of June 30, 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 June 30, 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 June 30, 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 and six months ended June 30, 2020 and 2019.

Concentration of Credit Risks

Concentration of Credit Risks 

As of June 30, 2020, the Company's properties were leased to a single tenant, the USPS. For the six months ended June 30, 2020, no state had a concentration of rental income over 10% as a percentage of total rental income. For the six months ended June 30, 2019, our total rental income of $3.3 million was concentrated in the following states: Texas (12.7%), Massachusetts (12.3%), Wisconsin (10.9%) and Pennsylvania (10.2%). 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 2,855,102 potentially dilutive shares outstanding related to the issuance of OP Units and LTIP Units held by non-controlling interests as of June 30, 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 June 30, 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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The Company's IPO and Formation Transactions (Tables)

6 Months Ended

Jun. 30, 2020

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

Schedule of predecessor statement of operations

	Predecessor						Postal Realty Trust, Inc.
	April 1,			January 1,			May 17,
	2019			2019			2019
	through			through			through
	May 16,			May 16,			June 30,
	2019			2019			2019
Revenues:
Rental income	$	756,969		$	2,249,355		$	1,099,459
Tenant reimbursements		111,219			348,075			162,010
Fee and other income		141,033			427,959			135,292
Total revenues		1,009,221			3,025,389			1,396,761
Operating Expenses:
Real estate taxes		117,723			367,512			171,048
Property operating expenses		115,010			366,716			133,576
General and administrative		106,557			483,448			861,475
Depreciation and amortization		245,313			725,756			522,459
Total operating expenses		584,603			1,943,432			1,688,558
Income (loss) from operations		424,618			1,081,957			(291,797	)
Interest expense, net:
Contractual interest expense		(212,352	)		(570,819	)		(15,688	)
Amortization of deferred financing costs		(1,592	)		(4,773	)		(262	)
Loss on early extinguishment of Predecessor debt		-			-			(185,586	)
Interest income		-			1,134			1,124
Total interest expense, net		(213,944	)		(574,458	)		(200,412	)
Income (loss) before income tax expense		210,674			507,499			(492,209	)
Income tax expense		-			(39,749	)		(6,259	)
Net income (loss)		210,674			467,750			(498,468	)
Less:
Net income attributable to noncontrolling interest in properties		(1,493	)		(4,336	)		-
Net income attributable to Predecessor	$	209,181		$	463,414			-
Net loss attributable to Operating Partnership unitholders’ noncontrolling interests								106,672
Net loss attributable to common stockholders							$	(391,796	)

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Summary of Significant Accounting Policies (Tables)

6 Months Ended

Jun. 30, 2020

Accounting Policies [Abstract]

Schedule of cash and escrows and reserves

	As of
	June 30, 2020		December 31, 2019
Cash	$	4,895,427	$	12,475,537
Escrows and reserves:
Maintenance reserve		664,825		663,339
ESPP reserve		49,426		44,727
Cash and escrows and reserves	$	5,609,678	$	13,183,603

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Real Estate Acquisitions (Tables)

6 Months Ended

Jun. 30, 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	$	4,825,507	$	24,572,597	$	293,726	$	2,477,174	$	7,148	$	(1,616,080	)	$	(34,098	)	$	30,525,974
June 30, 2020(6)		19		2,555,428		7,344,021		54,894		692,705		-		(38,934	)		-			10,608,114
		102	$	7,380,935	$	31,916,618	$	348,620	$	3,169,879	$	7,148	$	(1,655,014	)	$	(34,098	)	$	41,134,088

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 and $0.2 million for the three months ended June 30, 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.

(6) Includes the acquisition of a 13-building portfolio leased to the USPS in various states for approximately $7.2 million, including closing costs. In addition, the Company purchased six postal properties in individual or smaller portfolio transactions for approximately $3.4 million, including closing costs.

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Intangible Assets and Liabilities (Tables)

6 Months Ended

Jun. 30, 2020

Intangible Assets and Liabilities [Abstract]

Schedule of intangible assets and liabilities

As of	Gross Asset (Liability)			Accumulated (Amortization)/ Accretion			Net Carrying Amount
June 30, 2020:
In-place lease intangibles	$	16,957,903		$	(8,699,508	)	$	8,258,395
Above-market leases		47,768			(25,178	)		22,590
Below-market leases		(10,327,315	)		2,687,426			(7,639,889)
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	$	1,945,917	$	5,889	$	(529,407	)
2021		2,968,481		6,717		(1,004,488	)
2022		1,549,204		5,774		(893,108	)
2023		917,586		3,139		(811,708	)
2024		452,078		1,071		(721,221	)
Thereafter		425,129		-		(3,679,957	)
Total	$	8,258,395	$	22,590	$	(7,639,889	)

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Debt (Tables)

6 Months Ended

Jun. 30, 2020

Debt Disclosure [Abstract]

Schedule of principal balances of mortgage loans payable

	Outstanding Balance as of June 30, 2020			Outstanding Balance as of December 31, 2019			Interest Rate at June 30, 2020			Maturity Date
Revolving Credit Facility(1)	$	67,469,056		$	54,000,000			LIBOR+170bps	(2)	September 2023
Vision Bank(3)		1,490,882			1,522,672			4.00	%	September 2036
First Oklahoma Bank(4)		371,120			378,005			4.50	%	December 2037
Vision Bank – 2018(5)		884,739			900,385			5.00	%	January 2038
Seller Financing(6)		445,000			445,000			6.00	%	January 2025
First Oklahoma Bank – April 2020(7)		4,522,311			-			4.25	%	April 2040
First Oklahoma Bank – June 2020(8)		9,152,000			-			4.25	%	June 2040
Total Principal		84,335,108			57,246,062
Unamortized deferred financing costs		(242,506	)		(35,058	)
Total Debt	$	84,092,602		$	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. 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 First Oklahoma Bank-June 2020 secured mortgage financing.  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 and six months ended June 30, 2020, the Company incurred $0.1 million and $0.2 million, respectively, 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 June 30, 2020, the Company was in compliance with all of the Credit Facility’s debt covenants.

(2) As of June 30, 2020, the one-month LIBOR rate was 0.16%.

(3) Five properties are collateralized under this loan as of June 30, 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.

(7) In connection with the purchase of a 13-building portfolio, 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.

(8) The loan is collateralized by first mortgage liens on 22 properties. Interest rates resets in January 2027 to the greater of Prime or 4.25%. The financing matures in June 2040.

Schedule of Principal payments of mortgage loans payable

Year Ending December 31,	Amount
2020 – Remaining	$	55,189
2021		220,587
2022		701,225
2023		68,204,893
2024		767,852
Thereafter		14,385,362
Total	$	84,335,108

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Leases (Tables)

6 Months Ended

Jun. 30, 2020

Leases, Operating [Abstract]

Schedule of future minimum rental income

Year Ending December 31,	Amount
2020 – Remaining(2)	$	7,578,190
2021		14,219,786
2022		10,753,252
2023		8,248,719
2024		5,703,053
Thereafter		7,326,944
Total	$	53,829,944

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 June 30, 2020, the leases at 43 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. Holdover rent is paid as the greater of market rent or the rent amount due under the expired lease.

Schedule of future ground lease lease

Year Ending December 31,	Amount
2020 – Remaining	$	11,200
2021		22,400
2022		22,400
2023		22,400
2024		22,960
Thereafter		1,159,690
Total	$	1,261,050

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Related Party Transactions (Tables)

6 Months Ended

Jun. 30, 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	$	84,975
2021		188,869
2022		194,535
2023		200,371
2024		76,244
Total	$	744,994

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Earnings Per Share (Tables)

6 Months Ended

Jun. 30, 2020

Earnings Per Share [Abstract]

Schedule of weighted average shares basic and dilutive earnings per share

	For the Three Months Ended June 30,						For the Six Months Ended June 30,
	2020			2019			2020			2019
Numerator for earnings per share – basic and diluted:
Net loss attributable to common stockholders	$	(150,550	)	$	(391,796	)	$	(828,305	)	$	(391,796	)
Less: Income attributable to participating securities		(89,316	)		(16,715	)		(160,851	)		(16,715	)
Numerator for earnings per share — basic and diluted	$	(239,866	)	$	(408,511	)	$	(989,156	)	$	(408,511	)
Denominator for earnings per share – basic and diluted		5,205,153			5,164,264			5,189,900			5,164,264
Basic and diluted earnings per share	$	(0.05	)	$	(0.08	)	$	(0.19	)	$	(0.08	)

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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Stockholder's Equity (Tables)

6 Months Ended

Jun. 30, 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
April 30, 2020	May 11, 2020	May 29, 2020	$	0.20

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, as of January 1, 2020		148,847			120,003		—		268,850		$	16.96
Granted		146,348			94,303		62,096		302,747		$	14.20
Vesting of restricted shares (5)		(61,181	)		—		—		(61,181	)	$	17.00
Forfeited		(588	)		—		—		(588	)	$	17.00
Outstanding, as of June 30, 2020		233,426			214,306		62,096		509,828		$	15.35

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 six months ended June 30, 2020, 2,843 LTIPs issued to an employee vested as a result of a modification of the award and 13,708 LTIPs to the Company’s CEO. 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 six months ended June 30, 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.

(5) Includes 49,839 of restricted shares that vested and 11,342 shares of restricted shares that were withheld to satisfy minimum statutory withholding requirements.

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Organization and Description of Business (Details Narrative)	6 Months Ended
	Jun. 30, 2020 properties States $ / shares shares	Dec. 31, 2019 $ / shares shares	May 19, 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	65.70%
Number of properties | properties	6
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	5,423,861	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	400
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	568
Number of States | States	47
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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The Company's IPO and Formation Transactions (Details) - USD ($)		1 Months Ended	2 Months Ended	3 Months Ended				5 Months Ended	6 Months Ended
		Jun. 30, 2019	May 16, 2019	Jun. 30, 2020	Mar. 31, 2020	Jun. 30, 2019	Mar. 31, 2019	May 16, 2019	Jun. 30, 2020	Jun. 30, 2019
Revenues
Rental income				$ 4,640,403		$ 1,856,428			$ 8,941,174	$ 3,348,814
Tenant reimbursements				652,748		273,229			1,254,094	510,085
Fee and other income				311,786		276,325			607,305	563,251
Total revenues				5,604,937		2,405,982			10,802,573	4,422,150
Operating Expenses:
Real estate taxes				696,865		288,771			1,338,809	538,560
Property operating expenses				394,434		248,586			801,482	500,292
General and administrative				1,916,905		968,032			4,218,448	1,344,923
Depreciation and amortization				2,161,782		767,772			4,196,650	1,248,215
Total operating expenses				5,169,986		2,273,161			10,555,389	3,631,990
Income (loss) from operations				434,951		132,821			247,184	790,160
Interest expense, net:
Contractual interest expense				(544,915)		(228,040)			(1,273,141)	(586,507)
Amortization of deferred financing costs				(115,399)		(1,854)			(219,861)	(5,035)
Loss on early extinguishment of Predecessor debt						(185,586)				(185,586)
Interest income				661		1,124			1,487	2,258
Total interest expense, net				(659,653)		(414,356)			(1,491,515)	(774,870)
Income (loss) before income tax expense				(224,702)		(281,535)			(1,244,331)	15,290
Income tax expense				(4,925)		(6,259)			(15,122)	(46,008)
Net income (loss)				(229,627)	$ (1,029,826)	(287,794)			(1,259,453)	(30,718)
Less:
Net loss attributable to common stockholders	[1]			$ (150,550)					$ (828,305)
Postal Realty Trust, Inc.
Revenues
Rental income		$ 1,099,459
Tenant reimbursements		162,010
Fee and other income		135,292
Total revenues		1,396,761
Operating Expenses:
Real estate taxes		171,048
Property operating expenses		133,576
General and administrative		861,475
Depreciation and amortization		522,459
Total operating expenses		1,688,558
Income (loss) from operations		(291,797)
Interest expense, net:
Contractual interest expense		(15,688)
Amortization of deferred financing costs		(262)
Loss on early extinguishment of Predecessor debt		(185,586)
Interest income		1,124
Total interest expense, net		(200,412)
Income (loss) before income tax expense		(492,209)
Income tax expense		(6,259)
Net income (loss)		(498,468)
Less:
Net income attributable to noncontrolling interest in properties
Net income attributable to Predecessor
Net loss attributable to Operating Partnership unitholders' noncontrolling interests		106,672
Net loss attributable to common stockholders		(391,796)
Predecessor [Member]
Revenues
Rental income			$ 756,969					$ 2,249,355
Tenant reimbursements			111,219					348,075
Fee and other income			141,033					427,959
Total revenues			1,009,221					3,025,389
Operating Expenses:
Real estate taxes			117,723					367,512
Property operating expenses			115,010					366,716
General and administrative			106,557					483,448
Depreciation and amortization			245,313					725,756
Total operating expenses			584,603					1,943,432
Income (loss) from operations			424,618					1,081,957
Interest expense, net:
Contractual interest expense			(212,352)					(570,819)
Amortization of deferred financing costs			(1,592)					(4,773)
Loss on early extinguishment of Predecessor debt
Interest income								1,134
Total interest expense, net			(213,944)					(574,458)
Income (loss) before income tax expense			210,674					507,499
Income tax expense								(39,749)
Net income (loss)		$ (498,468)	210,674				$ 257,076	467,750
Less:
Net income attributable to noncontrolling interest in properties			(1,493)					(4,336)
Net income attributable to Predecessor			$ 209,181					$ 463,414
Net loss attributable to common stockholders	[1]					$ (391,796)				$ (391,796)

[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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The Company's IPO and Formation Transactions (Details Narrative) - IPO [Member]	May 19, 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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Summary of Significant Accounting Policies (Details) - USD ($)	Jun. 30, 2020	Dec. 31, 2019	Jun. 30, 2019	Dec. 31, 2018
Cash	$ 4,895,427	$ 12,475,537
Escrows and reserves:
Maintenance reserve	664,825	663,339
ESPP reserve	49,426	44,727
Cash and escrows and reserves	$ 5,609,678	$ 13,183,603	$ 12,346,144
Predecessor [Member]
Escrows and reserves:
Cash and escrows and reserves				$ 861,875

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Summary of Significant Accounting Policies (Details Narrative) - USD ($)	6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019	Dec. 31, 2019
Summary of Significant Accounting Policies (Textual)
Potentially dilutive shares outstanding	2,855,102
Secured borrowings	$ 16,900,000		$ 3,200,000
Principal balance	$ 16,900,000		$ 3,200,000
Concentration of credit risks, description	The Company's properties were leased to a single tenant, the USPS. For the six months ended June 30, 2020, no state had a concentration of rental income over 10% as a percentage of total rental income.	For the six months ended June 30, 2019, our total rental income of $3.3 million was concentrated in the following states: Texas (12.7%), Massachusetts (12.3%), Wisconsin (10.9%) and Pennsylvania (10.2%).

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Real Estate Acquisitions (Details)		3 Months Ended				6 Months Ended
		Jun. 30, 2020 USD ($) properties		Mar. 31, 2020 USD ($) properties	[3],[4],[5]	Jun. 30, 2020 USD ($) properties
Total purchase price	[1]	$ 10,608,114	[2]	$ 30,525,974		$ 41,134,088
Number of Properties | properties		19	[2]	83		102	[2]
Land [Member]
Total purchase price		$ 2,555,428	[2]	$ 4,825,507		$ 7,380,935
Building and Improvements [Member]
Total purchase price		7,344,021	[2]	24,572,597		31,916,618
Tenant Improvements [Member]
Total purchase price		54,894	[2]	293,726		348,620
In-place lease intangibles [Member]
Total purchase price		692,705	[2]	2,477,174		3,169,879
Above-market leases [Member]
Total purchase price			[2]	7,148		7,148
Below Market Leases [Member]
Total purchase price		(38,934)	[2]	(1,616,080)		(1,655,014)
Other [Member]
Total purchase price	[6]			$ (34,098)		$ (34,098)

[1] Includes acquisition costs of $0.3 million for the three months ended March 31, 2020 and $0.2 million for the three months ended June 30, 2020.

[2] Includes the acquisition of a 13-building portfolio leased to the USPS in various states for approximately $7.2 million, including closing costs. In addition, the Company purchased six postal properties in individual or smaller portfolio transactions for approximately $3.4 million, including closing costs.

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

[4] 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.

[5] 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.

[6] 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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Real Estate Acquisitions (Details Narrative)	3 Months Ended
	Jun. 30, 2020 USD ($) properties	Mar. 31, 2020 USD ($)
Real Estate Acquisitions (Textual)
Acquisition costs	$ 200,000	$ 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 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.
Number of properties | properties	6
Number of acquired postal property | properties	13
Acquired, Postal Properties, including closing costs	$ 7,200,000	8,800,000
Acquired, Postal Properties in individual or smaller portfolio transactions, including closing costs		$ 8,100,000
Additional acquired, Postal Properties, including closing costs	$ 3,400,000

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Intangible Assets and Liabilities (Details) - USD ($)	Jun. 30, 2020	Dec. 31, 2019
In-place lease intangibles [Member]
Gross Asset (Liability)	$ 16,957,903	$ 13,788,024
Accumulated (Amortization)/Accretion	(8,699,508)	(6,472,157)
Net Carrying Amount	8,258,395	7,315,867
Above-market leases [Member]
Gross Asset (Liability)	47,768	40,620
Accumulated (Amortization)/Accretion	(25,178)	(18,496)
Net Carrying Amount	22,590	22,124
Below-market leases [Member]
Gross Asset (Liability)	(10,327,315)	(8,672,301)
Accumulated (Amortization)/Accretion	2,687,426	2,071,182
Net Carrying Amount	$ (7,639,889)	$ (6,601,119)

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Intangible Assets and Liabilities (Details 1) - USD ($)	Jun. 30, 2020	Dec. 31, 2019
Total	$ 8,258,395	$ 7,315,867
In-place lease intangibles [Member]
2020 - Remaining	1,945,917
2021	2,968,481
2022	1,549,204
2023	917,586
2024	452,078
Thereafter	425,129
Total	8,258,395
Above-market leases [Member]
2020 - Remaining	5,889
2021	6,717
2022	5,774
2023	3,139
2024	1,071
Thereafter
Total	22,590
Below-market leases [Member]
2020 - Remaining	(529,407)
2021	(1,004,488)
2022	(893,108)
2023	(811,708)
2024	(721,221)
Thereafter	(3,679,957)
Total	$ (7,639,889)

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Intangible Assets and Liabilities (Details Narrative) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019
Intangible Assets and Liabilities (Textual)
Amortization of in-place intangibles	$ 1,100,000	$ 400,000	$ 2,227,351	$ 636,080
Amortization of acquired above market leases	3,576	2,616	6,682	4,986
Amortization of acquired below market leases	$ 300,000	$ 100,000	$ 600,000	$ 200,000

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Debt (Details) - USD ($)		6 Months Ended
		Jun. 30, 2020	Dec. 31, 2019
Mortgage level debt		$ 16,623,546	$ 3,211,004
Revolving credit facility		67,469,056	54,000,000
Total Principal		84,335,108	57,246,062
Unamortized deferred financing costs		(242,506)	(35,058)
Total Debt		84,092,602	57,211,004
Revolving Credit Facility [Member]
Revolving credit facility	[1]	$ 67,469,056	54,000,000
Interest Rate, description	[1],[2]	LIBOR+170bps
Maturity Date	[1]	Sep. 30, 2023
Vision Bank [Member]
Mortgage level debt	[3]	$ 1,490,882	1,522,672
Interest Rate	[3]	4.00%
Maturity Date	[3]	Sep. 30, 2036
First Oklahoma Bank [Member]
Mortgage level debt	[4]	$ 371,120	378,005
Interest Rate	[4]	4.50%
Maturity Date	[4]	Dec. 31, 2037
Vision Bank - 2018 [Member]
Mortgage level debt	[5]	$ 884,739	900,385
Interest Rate	[5]	5.00%
Maturity Date	[5]	Jan. 31, 2038
Seller Financing [Member]
Mortgage level debt	[6]	$ 445,000	445,000
Interest Rate	[6]	6.00%
Maturity Date	[6]	Jan. 31, 2025
First Oklahoma Bank - April 2020 [Member]
Mortgage level debt	[7]	$ 4,522,311
Interest Rate	[7]	4.25%
Interest Rate, description		which resets in November 2026 to the greater of Prime or 4.25%.
Maturity Date	[7]	Apr. 30, 2040
First Oklahoma Bank- June 2020 [Member]
Mortgage level debt	[8]	$ 9,152,000
Interest Rate	[8]	4.25%
Maturity Date	[8]	Jun. 30, 2040

[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. 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 First Oklahoma Bank-June 2020 secured mortgage financing. 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 and six months ended June 30, 2020, the Company incurred $0.1 million and $0.2 million, respectively, 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 June 30, 2020, the Company was in compliance with all of the Credit Facility's debt covenants.

[2] As of June 30, 2020, the one-month LIBOR rate was 0.16%.

[3] Five properties are collateralized under this loan as of June 30, 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.

[7] In connection with the purchase of a 13-building portfolio, 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.

[8] The loan is collateralized by first mortgage liens on 22 properties. Interest rates resets in January 2027 to the greater of Prime or 4.25%. The financing matures in June 2040.

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Debt (Details 1) - USD ($)	Jun. 30, 2020	Dec. 31, 2019
Debt Disclosure [Abstract]
2020 - Remaining	$ 55,189
2021	220,587
2022	701,225
2023	68,204,893
2024	767,852
Thereafter	14,385,362
Total	$ 84,335,108	$ 57,246,062

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Debt (Details Narrative) - USD ($)		3 Months Ended	6 Months Ended
	Sep. 27, 2019	Jun. 30, 2020	Jun. 30, 2020	May 31, 2020	Jan. 30, 2020
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			0.16%
Unused facility fee		$ 100,000	$ 200,000
Maximum increase in borrowing capacity	$ 100,000,000
Current available borrowing capacity under the credit facility				$ 5,100,000	$ 150,000,000
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 June 30, 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.
First Oklahoma Bank - April 2020 [Member]
Mortgage Loans Payable (Textual)
Maximum borrowing facility		$ 4,500,000	$ 4,500,000
Credit facility, maturity			April 2040
Interest rate, description			which resets in November 2026 to the greater of Prime or 4.25%.
Percentage of interest rate			4.25%
First Oklahoma Bank- June 2020 [Member]
Mortgage Loans Payable (Textual)
Credit facility, maturity			June 2040
Percentage of interest rate			4.25%

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Leases (Details)	Jun. 30, 2020 USD ($)
Leases, Operating [Abstract]
2020 - Remaining	$ 7,578,190	[1],[2]
2021	14,219,786
2022	10,753,252
2023	8,248,719
2024	5,703,053
Thereafter	7,326,944	[2]
Total	$ 53,829,944	[2]

[1] As of June 30, 2020, the leases at 43 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. Holdover rent is paid as the greater of market rent or the rent amount due under the expired 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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Leases (Details 1)	Jun. 30, 2020 USD ($)
Ground Lease [Abstract]
2020 - Remaining	$ 11,200
2021	22,400
2022	22,400
2023	22,400
2024	22,960
Thereafter	1,159,690
Total	$ 1,261,050

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Leases (Details Narrative)	6 Months Ended
	Jun. 30, 2020 properties
Leases, Operating [Textual]
Lease expiration, description	Certain leases have expired and the balance expire at various dates through November 30, 2029.
Number of holdover properties	43
Operating ground lease [Member]
Leases, Operating [Textual]
Lease expiration, description	The lease term (including renewal options) and expires on September 30, 2059.

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Income Taxes (Details Narrative) - USD ($)	2 Months Ended	3 Months Ended		5 Months Ended	6 Months Ended
	May 16, 2019	Jun. 30, 2020	Jun. 30, 2019	May 16, 2019	Jun. 30, 2020	Jun. 30, 2019
Unrecognized tax benefits					$ 500,000
Income tax expense		$ 4,925	$ 6,259		15,122	$ 46,008
Benefit due to finalizing tax filing related to UPH		$ 9,657			$ 9,657
Predecessor [Member]
Effective tax rate						13.40%
Income tax expense				$ 39,749
Statutory rate						21.00%

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Related Party Transactions (Details)	Jun. 30, 2020 USD ($)
Related Party Transactions [Abstract]
2020 - Remaining	$ 84,975
2021	188,869
2022	194,535
2023	200,371
2024	76,244
Total	$ 744,994

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Related Party Transactions (Details Narrative) - USD ($)		3 Months Ended		6 Months Ended
	Oct. 01, 2018	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 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 that were obtained prior to 2020 and Vision Bank, totaling $2.7 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		$ 200,000		$ 500,000
Accrued management fees receivable		100,000		100,000
Predecessor [Member]
Related Party Transactions (Line Items)
Management fee income			$ 100,000		$ 400,000
Accrued management fees receivable		100,000		$ 100,000		$ 80,000
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
Office Lease 2 [Member]
Related Party Transactions (Line Items)
Lease agreement entered date				May 17, 2019
Monthly rent amount				$ 15,000
Rental expenses		$ 47,782		$ 95,564
Lease term		5 years		5 years
Lease expire date				May 16, 2024

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Earnings Per Share (Details) - USD ($)		3 Months Ended			6 Months Ended
		Jun. 30, 2020		Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019
Numerator for earnings per share - basic and diluted:
Net loss attributable to common stockholders	[1]	$ (150,550)			$ (828,305)
Less: Income attributable to participating securities	[1]	(89,316)			(160,851)
Numerator for earnings per share - basic and diluted	[1]	$ (239,866)			$ (989,156)
Denominator for earnings per share - basic and diluted		5,205,153	[1]	5,164,264	5,189,900	5,164,264
Basic and diluted earnings per share	[1]	$ (0.05)			$ (0.19)
Predecessor [Member]
Numerator for earnings per share - basic and diluted:
Net loss attributable to common stockholders	[1]			$ (391,796)		$ (391,796)
Less: Income attributable to participating securities	[1]			(16,715)		(16,715)
Numerator for earnings per share - basic and diluted	[1]			$ (408,511)		$ (408,511)
Basic and diluted earnings per share	[1]			$ (0.08)		$ (0.08)

[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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Stockholder's Equity (Details)	6 Months Ended
	Jun. 30, 2020 $ / shares
Amount Per Share	$ 0.17
January 30, 2020 [Member]
Declaration Date	Jan. 30, 2020
Record Date	Feb. 14, 2020
Date Paid	Feb. 28, 2020
Amount Per Share	$ 0.17
April 30, 2020 [Member]
Declaration Date	Apr. 30, 2020
Record Date	May 11, 2020
Date Paid	May 29, 2020
Amount Per Share	$ 0.20

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Stockholder's Equity (Details 1)	6 Months Ended
	Jun. 30, 2020 $ / shares shares
Outstanding, at beginning of period	268,850
Granted	302,747
Vesting of restricted shares	(61,181)	[1]
Forfeited	(588)
Outstanding, at end of period	509,828
Weighted Average Grant Date Fair Value
Outstanding, at beginning of period | $ / shares	$ 16.96
Granted | $ / shares	14.20
Vesting of restricted shares | $ / shares	17.00	[1]
Forfeited | $ / shares	17.00
Outstanding, at end of period | $ / shares	$ 15.35
Restricted Shares [Member]
Outstanding, at beginning of period	148,847	[2],[3]
Granted	146,348	[2],[3]
Vesting of restricted shares	(61,181)	[1],[2],[3]
Forfeited	(588)	[2],[3]
Outstanding, at end of period	233,426	[2],[3]
LTIP Units [Member]
Outstanding, at beginning of period	120,003	[4]
Granted	94,303	[4]
Vesting of restricted shares		[1],[4]
Forfeited		[4]
Outstanding, at end of period	214,306	[4]
Restricted Stock Units (RSUs) [Member]
Outstanding, at beginning of period		[5]
Granted	62,096	[5]
Vesting of restricted shares		[1],[5]
Forfeited		[5]
Outstanding, at end of period	62,096	[5]

[1] Includes 49,839 of restricted shares that vested and 11,342 shares of restricted shares that were withheld to satisfy minimum statutory withholding requirements.

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

[3] 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.

[4] LTIP units to our officers and employees typically vest over three to eight years. During the six months ended June 30, 2020, 2,843 LTIPs issued to an employee vested as a result of a modification of the award and 13,708 LTIPs to the Company's CEO. 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.

[5] Includes 38,672 RSUs granted to certain officers of the Company during the six months ended June 30, 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 Narrative) - USD ($)		1 Months Ended	3 Months Ended		6 Months Ended
	May 19, 2019	Apr. 27, 2020	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019	Dec. 31, 2019
Class of Stock [Line Items]
Non-controlling interests OP Units			2,640,795		2,640,795		2,157,462
Non-controlling interests LTIP Units			214,307		214,307		120,004
Outstanding partnership percentage			34.30%		34.30%		30.00%
Remaining shares available for future issuance			751,697		751,697
Maximum number of restricted shares			541,584		541,584
Equity Incentive Plan, description		The Board of Directors amended the Equity Incentive Plan to increase the total number of shares of Class A common stock that may be issued under the Plan from 541,584 shares to 1,291,584 shares.
Dividends paid			$ 1,700,000		$ 3,100,000
Total unrecognized compensation cost related to unvested awards			6,600,000		6,600,000
Total recognized compensation expense			$ 500,000	$ 200,000	$ 1,200,000	$ 200,000
Expected to be recognized over a weighted average period					4 years 2 months 30 days
Stock based compensation plans vesting period					5 years
Fair vale of restricted shares					$ 1,000,000
Minimum [Member]
Class of Stock [Line Items]
Maximum number of restricted shares		541,584
Maximum [Member]
Class of Stock [Line Items]
Maximum number of restricted shares		1,291,584
Non-controlling Interest [Member]
Class of Stock [Line Items]
OPU and LTIP, description					The Company issued 483,333 OP Units in January 2020 in connection with a portfolio that the Company acquired, 53,230 LTIP Units in February 2020 to the Company’s CEO for his 2019 incentive bonus, 13,708 LTIP Units in March 2020 to the Company’s CEO and 27,365 LTIP Units in May 2020 to the Company’s CEO for his salary for the period of May 18, 2020 to December 31, 2020.
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 six months ended June 30, 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.
Vesting of Restricted Shares [Member]
Class of Stock [Line Items]
Granted to issue restricted shares					49,839
Restricted shares withheld					11,342
LTIP Units [Member]
Class of Stock [Line Items]
Amount Per Share			$ 0.37		$ 0.37
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
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			$ 1,557		$ 10,102
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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Subsequent Events (Details Narrative) - Subsequent Event [Member]			1 Months Ended
	Aug. 11, 2020 USD ($) properties	Jul. 15, 2020	Jul. 30, 2020 $ / shares	Aug. 07, 2020 USD ($)	Jul. 24, 2020 USD ($)	Jul. 17, 2020 USD ($)	Jul. 08, 2020 USD ($)
Subsequent Event [Line Items]
Current lease renewal and revised USPS lease form, description	The USPS is occupying such properties as a holdover tenant, representing an aggregate annualized rental income of $2.4 million. As of the date of this report, the USPS has not vacated or notified us of its intention to vacate any of these 55 properties.
Acquisition of properties, description	We purchased 98 postal properties for approximately $23.4 million during the period subsequent to June 30, 2020.
Amount of credit facility satisfied | $					$ 42,000,000
Common stock dividend per share | $ / shares			$ 0.205
Common stock dividend paid			Aug. 31, 2020
Common stock dividend record			Aug. 14, 2020
Subsequent acquisitions costs | $	$ 3,700,000
Number of lease properties in holdover that expired in 2018 | properties	1
Number of lease properties in holdover that expired in 2019 | properties	21
Number of lease properties in holdover that expired in 2020 | properties	33
Follow on public offering, description		The Company priced a public offering of 3.5 million shares of its Class A Common Stock (the “Follow-on Offering”) at $13.00 per share. On July 17, 2020, the underwriters purchased an additional 521,840 shares pursuant to a 30-day option to purchase up to an additional 525,000 shares at $13.00 per share (the “Additional Shares”). The Follow-on Offering, including the Additional Shares, closed on July 20, 2020 resulting in $52.2 million in gross proceeds, and approximately $49.4 million in net proceeds after deducting approximately $2.9 million in underwriting discounts and before giving effect to $0.9 million in other estimated expenses relating to the Follow-on Offering.
Amount drawn on credit facility | $	$ 39,500,000			$ 3,000,000		$ 6,500,000	$ 4,500,000