10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

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

For the quarterly period ended June 30, 2023

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	(IRS 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

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

Title of Each Class	Trading Symbol	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 x     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 x     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 x

As of August 7, 2023, the registrant had 20,621,598 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, 2023 (Unaudited) and December 31, 2022	1
	Consolidated Statements of Operations and Comprehensive Income (Unaudited) for the Three and Six Months Ended June 30, 2023 and 2022	2
	Consolidated Statements of Changes in Equity (Unaudited) for the Three and Six Months Ended June 30, 2023 and 2022	3
	Consolidated Statements of Cash Flows (Unaudited) for the Six Months Ended June 30, 2023 and 2022	5
	Notes to Consolidated Financial Statements (Unaudited)	7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	24
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	37
Item 4.	Controls and Procedures	37
PART II. OTHER INFORMATION
Item 1.	Legal Proceedings	38
Item 1A.	Risk Factors	38
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	38
Item 3.	Defaults Upon Senior Securities	38
Item 4.	Mine Safety Disclosures	38
Item 5.	Other Information	38
Item 6.	Exhibits	40
Signatures		41

i

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

POSTAL REALTY TRUST, INC.

CONSOLIDATED BALANCE SHEETS

(UNAUDITED)

(In thousands, except par value and share data)

	June 30, 2023		December 31, 2022
Assets
Investments:
Real estate properties, at cost:
Land	$	96,063	$	90,020
Building and improvements	405,927		378,596
Tenant improvements	6,643		6,375
Total real estate properties, at cost	508,633		474,991
Less: Accumulated depreciation	(37,286)		(31,257)
Total real estate properties, net	471,347		443,734
Investment in financing leases, net	16,083		16,130
Total real estate investments, net	487,430		459,864
Cash	2,191		1,495
Escrow and reserves	751		547
Rent and other receivables	3,936		4,613
Prepaid expenses and other assets, net	15,225		15,968
Goodwill	1,536		1,536
Deferred rent receivable	1,356		1,194
In-place lease intangibles, net	14,340		15,687
Above market leases, net	385		399
Total Assets	$	527,150	$	501,303
Liabilities and Equity
Liabilities:
Term loans, net	$	163,887	$	163,753
Revolving credit facility	29,000		—
Secured borrowings, net	32,822		32,909
Accounts payable, accrued expenses and other, net	7,996		9,109
Below market leases, net	11,875		11,821
Total Liabilities	245,580		217,592
Commitments and Contingencies
Equity:
Class A common stock, par value $0.01 per share; 500,000,000 shares authorized; 20,002,769 and 19,528,066 shares issued and outstanding as of June 30, 2023 and December 31, 2022, respectively	200		195
Class B common stock, par value $0.01 per share; 27,206 shares authorized: 27,206 shares issued and outstanding as of June 30, 2023 and December 31, 2022	—		—
Additional paid-in capital	258,331		254,107
Accumulated other comprehensive income	7,934		7,486
Accumulated deficit	(40,754)		(32,557)
Total Stockholders’ Equity	225,711		229,231
Operating Partnership unitholders’ non-controlling interests	55,859		54,480
Total Equity	281,570		283,711
Total Liabilities and Equity	$	527,150	$	501,303

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

1

POSTAL REALTY TRUST, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME

(UNAUDITED)

(in thousands, except share and per share data)

	For the Three Months Ended June 30,				For the Six Months Ended June 30,
	2023		2022		2023		2022
Revenues:
Rental income	$	14,762	$	12,135	$	29,261	$	23,484
Fee and other	695		589		1,344		1,171
Total revenues	15,457		12,724		30,605		24,655
Operating expenses:
Real estate taxes	2,029		1,705		4,012		3,295
Property operating expenses	1,414		1,230		3,038		2,760
General and administrative	3,610		3,309		7,769		6,950
Depreciation and amortization	4,781		4,219		9,618		8,329
Total operating expenses	11,834		10,463		24,437		21,334
Income from operations	3,623		2,261		6,168		3,321
Other income	125		187		239		674
Interest expense, net:
Contractual interest expense	(2,302)		(1,111)		(4,347)		(1,797)
Write-off and amortization of deferred financing fees	(165)		(155)		(330)		(284)
Interest income	1		1		1		1
Total interest expense, net	(2,466)		(1,265)		(4,676)		(2,080)
Income before income tax expense	1,282		1,183		1,731		1,915
Income tax expense	(21)		(18)		(37)		(29)
Net income	1,261		1,165		1,694		1,886
Net income attributable to Operating Partnership unitholders’ non-controlling interests	(249)		(212)		(334)		(338)
Net income attributable to common stockholders	$	1,012	$	953	$	1,360	$	1,548
Net income per share:
Basic and Diluted	$	0.03	$	0.04	$	0.04	$	0.06
Weighted average common shares outstanding:
Basic and Diluted	19,544,833		18,398,808		19,417,304		18,383,544
Comprehensive income:
Net income	$	1,261	$	1,165	$	1,694	$	1,886
Unrealized gain on derivative instruments	3,399		504		562		3,015
Comprehensive income	4,660		1,669		2,256		4,901
Comprehensive income attributable to Operating Partnership unitholders’ non-controlling interests	(921)		(304)		(448)		(869)
Comprehensive income attributable to common stockholders	$	3,739	$	1,365	$	1,808	$	4,032

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

2

POSTAL REALTY TRUST, INC.

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

(UNAUDITED)

(in thousands, except share and per share data)

	Number of shares of Common Stock	Common Stock		Additional Paid-in Capital		Accumulated Other Comprehensive Income (Loss)		Accumulated Deficit		Total Stockholders’ equity		Operating Partnership unitholders’ non-controlling interests		Total Equity
Balance – December 31, 2022	19,555,272	$	195	$	254,107	$	7,486	$	(32,557)	$	229,231	$	54,480	$	283,711
Net proceeds from sale of common stock	55,082	1		709		—		—		710		—		710
Shares issued upon redemption of operating partnership units ("OP Units")	22,798	—		409		—		—		409		(409)		—
Issuance and amortization of equity-based compensation	146,627	1		1,376		—		—		1,377		568		1,945
Issuance and amortization under the employee stock purchase plan ("ESPP")	6,446	—		94		—		—		94		—		94
Restricted stock withholdings	(21,310)	—		(327)		—		—		(327)		—		(327)
Dividends and distributions	—	—		—		—		(4,787)		(4,787)		(1,176)		(5,963)
Unrealized loss on derivative instrument	—	—		—		(2,279)		—		(2,279)		(558)		(2,837)
Net income	—	—		—		—		348		348		85		433
Reallocation of non-controlling interest	—	—		(2,338)		—		—		(2,338)		2,338		—
Balance – March 31, 2023	19,764,915	$	197	$	254,030	$	5,207	$	(36,996)	$	222,438	$	55,328	$	277,766
Net proceeds from sale of common stock	265,225	3		3,840		—		—		3,843		—		3,843
Issuance of OP Units in connection with transaction	—	—		—		—		—		—		548		548
Cash redemption for non-controlling interests	—	—		—		—		—		—		(558)		(558)
Issuance and amortization of equity-based compensation, net of forfeitures	(165)	—		684		—		—		684		558		1,242
Issuance and amortization under ESPP	—	—		6		—		—		6		—		6
Dividends and distributions	—	—		—		—		(4,770)		(4,770)		(1,167)		(5,937)
Unrealized gain on derivative instrument	—	—		—		2,727		—		2,727		672		3,399
Net income	—	—		—		—		1,012		1,012		249		1,261
Reallocation of non-controlling interest	—	—		(229)		—		—		(229)		229		—
Balance – June 30, 2023	20,029,975	$	200	$	258,331	$	7,934	$	(40,754)	$	225,711	$	55,859	$	281,570
Balance - December 31, 2021	18,591,627	$	186	$	237,969	$	766	$	(18,879)	$	220,042	$	45,431	$	265,473
Issuance of OP Units in connection with acquisition transactions	—	—		—		—		—		—		3,238		3,238

3

Issuance and amortization of equity-based compensation	199,102	2		1,426		—			—		1,428		371		1,799
Issuance and amortization under ESPP	5,387	—		100		—			—		100		—		100
Restricted stock withholdings	(3,492)	—		(62)		—			—		(62)		—		(62)
Dividends and distributions	—	—		—		—			(4,295)		(4,295)		(902)		(5,197)
Accumulated other comprehensive income	—	—		—		2,072			—		2,072		439		2,511
Net income	—	—		—		—			595		595		126		721
Reallocation of non-controlling interest	—	—		346		—			—		346		(346)		—
Balance – March 31, 2022	18,792,624	$	188	$	239,779	$	2,838		$	(22,579)	$	220,226	$	48,357	$	268,583
Net proceeds from sale of common stock	—	—		—		—			—		—		—		—
Issuance of OP Units in connection with acquisition transactions	—	—		—		—			—		—		1,987		1,987
Issuance and amortization of equity-based compensation, net of forfeitures	(471)	—		618		—			—		618		366		984
Issuance and amortization under ESPP	—	—		2		—			—		2		—		2
Restricted stock withholdings	(14,590)	—		(221)		—			—		(221)		—		(221)
Dividends and distributions	—	—		—		—			(4,342)		(4,342)		(963)		(5,305)
Accumulated other comprehensive income	—	—		—		412			—		412		92		504
Net income	—	—		—		—		—	953		953		212		1,165
Reallocation of non-controlling interest	—	—		225		—			—		225		(225)		—
Balance – June 30, 2022	18,777,563	$	188	$	240,403	$	3,250		$	(25,968)	$	217,873	$	49,826	$	267,699

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

4

POSTAL REALTY TRUST, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

(in thousands)

	For the Six Months Ended June 30,
	2023		2022
Cash flows from operating activities:
Net income	$	1,694	$	1,886
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	6,071		4,865
Amortization of in-place intangibles	3,547		3,464
Write-off and amortization of deferred financing costs	330		284
Amortization of above/below market leases	(1,176)		(1,022)
Amortization of intangible liability	(49)		(41)
Equity based compensation	3,207		2,691
Deferred rent receivable	(162)		(293)
Deferred rent expense payable	2		5
Other	23		23
Changes in assets and liabilities:
Rent and other receivables	884		834
Prepaid expenses and other assets	1,171		964
Accounts payable, accrued expenses and other	(935)		(603)
Net cash provided by operating activities	14,607		13,057
Cash flows from investing activities:
Acquisition of real estate	(32,863)		(79,879)
Investment in financing leases	—		(10)
Escrows for acquisition and construction deposits	(222)		(568)
Capital improvements	(968)		(1,781)
Insurance proceeds related to property damage claims	—		557
Other investing activities	(28)		(591)
Net cash used in investing activities	(34,081)		(82,272)
Cash flows from financing activities:
Repayments of secured borrowings	(97)		(92)
Proceeds from term loans	—		75,000
Proceeds from revolving credit facility	32,000		92,000
Repayments of revolving credit facility	(3,000)		(87,000)
Redemption of OP Units	(558)		—
Net proceeds from issuance of shares	4,561		—
Deferred offering costs	(107)		(242)
Debt issuance costs	—		(612)
Proceeds from issuance of ESPP shares	79		83
Value of shares withheld for payment of taxes related to employee stock compensation	(467)		(383)
Dividends and distributions	(11,900)		(10,502)
Other financing activities	(137)		(116)
Net cash provided by financing activities	20,374		68,136
Net increase (decrease) in Cash and Escrows and Reserves	900		(1,079)
Cash and Escrows and Reserves at the beginning of period	2,042		7,026
Cash and Escrow and Reserves at the end of period	$	2,942	$	5,947
Supplemental Disclosure of Non-Cash Investing and Financing Activities
Reallocation of non-controlling interest	2,567		571
Unrealized gain on interest rate swaps, net	562		3,015

5

OP Units issued for property acquisitions	548	3,773
Shares issued upon redemption of OP Units	409	—
Accrued capital expenditures included in accounts payable and accrued expenses	235	846
Reclassification of acquisition deposits included in prepaid expenses and other assets	205	504
Write-off of fixed assets no longer in service	151	129
Reclassification of construction deposits included in prepaid expenses and other assets	113	12
Accrued costs of capital included in accounts payable and accrued expenses	8	11
Right of use assets	—	38
OP Units issued for business acquisition	—	1,451

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

6

POSTAL REALTY TRUST, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Note 1. Organization and Description of Business

Postal Realty Trust, Inc. (the “Company”) 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 (the “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 (the “OP Units”). Both the Company and the Operating Partnership commenced operations upon completion of the IPO and certain related 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, 2023, the Company held an approximately 80.2% 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 the Company is the primary beneficiary.

As of June 30, 2023, the Company owned a portfolio of 1,364 properties located in 49 states and one territory. The Company’s properties are leased primarily to a single tenant, the United States Postal Service (the “USPS”).

In addition, through its taxable REIT subsidiary (“TRS”), Real Estate Asset Counseling, LLC (“REAC”), the Company provides fee-based third party property management services for an additional 397 properties, which are owned by Andrew Spodek, the Company's chief executive officer ("CEO"), and his affiliates, and certain advisory services to third-party owners of postal properties.

Pursuant to the Company’s articles of amendment and restatement, 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 (the “Voting Equivalency stock”), and up to 100,000,000 shares of preferred stock.

The Company elected to be taxed as a real estate investment trust (“REIT”) under the Internal Revenue Code of 1986, as amended (the “Code”), commencing with the Company's short taxable year ended December 31, 2019, and intends to continue to qualify as a REIT. 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. Additionally, any income earned by the TRS and any other TRS the Company forms in the future will be subject to federal, state and local corporate income tax.

Pursuant to the Jumpstart Our Business Startups Act, the Company qualifies as an emerging growth company (“EGC”). An EGC may choose, as the Company has 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.

Note 2. Summary of Significant Accounting Policies

Basis of Presentation

The accompanying unaudited Consolidated Financial Statements include the financial position and results of operations of the Company, the Operating Partnership and its wholly owned subsidiaries.

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. Substantially all of the assets and liabilities of the Company relate to the Operating Partnership.

7

POSTAL REALTY TRUST, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

(CONTINUED)

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 reflects the income attributed to controlling and non-controlling interests.

The accompanying unaudited 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 Financial Statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022. 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, 2023. 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. As discussed in the Consolidated Financial Statements in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022, the Company’s most significant assumptions and estimates are related to the valuation of investments in real estate properties and impairment of long-lived assets. Although management believes its estimates are reasonable, actual results could differ from those estimates.

Offering and Other Costs

Offering costs are recorded in “Total Stockholders’ Equity” on the Consolidated Balance Sheets as a reduction of additional paid-in capital.

Deferred Costs

Financing costs related to the issuance of the Company’s long-term debt, including the term loan facility component of the Company's existing credit facilities (the "Credit Facilities"), are deferred and amortized as an increase to interest expense over the term of the related debt instrument using the straight-line method, which approximates the effective-interest rate method, and are reported as a reduction of the related debt balance on the Consolidated Balance Sheets. Deferred financing costs related to the revolving credit facility component (the "Revolving Credit Facility") of the Credit Facilities are deferred and amortized as an increase to interest expense over the terms of the Revolving Credit Facility and are included in “Prepaid expenses and other assets, net” on the Consolidated Balance Sheets.

Cash and Escrows and Reserves

Cash includes unrestricted cash with a maturity of three months or less. Escrows and reserves consist of restricted cash. The following table provides a reconciliation of cash and escrows and reserves reported within the Consolidated Balance Sheets and Consolidated Statements of Cash Flows:

	As of
	June 30, 2023		December 31, 2022
	(in thousands)
Cash	$	2,191	$	1,495
Escrows and reserves:
Maintenance reserve	260		206
Real estate tax reserve	384		240
ESPP reserve	107		101
Cash and escrows and reserves	$	2,942	$	2,042

8

POSTAL REALTY TRUST, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

(CONTINUED)

Revenue Recognition

The Company has operating lease agreements with tenants, some of which contain provisions for future rental increases. Rental income is recognized on a straight-line basis over the term of the lease. In addition, certain lease agreements provide for reimbursements from tenants for real estate taxes and other recoverable costs, which are recorded on an accrual basis as part of “Rental income” in the Consolidated Statements of Operations and Comprehensive Income. The Company’s determination of the probability to collect lease payments is impacted by numerous factors, including the Company's assessment of the tenant’s creditworthiness, economic conditions, historical experience with the tenant, future prospects for the tenant and the length of the lease term. If leases currently classified as probable of collection are subsequently reclassified as not probable, any outstanding lease receivables (including straight-line rent receivables) would be written-off with a corresponding decrease in rental income.

Fee and other primarily consists of (i) property management fees, (ii) income recognized from properties accounted for as financing leases and (iii) fees earned from providing advisory services to third-party owners of postal properties.

The management fees arise from contractual agreements with entities that are affiliated with the Company’s CEO. Management fee income is recognized as earned under the respective agreements.

Revenue from direct financing leases is recognized over the lease term using the effective interest rate method. At lease inception, the Company records an asset within "Investment in financing leases, net" on the Consolidated Balance Sheets, which represents the Company’s net investment in the direct financing lease. This initial net investment is determined by aggregating the total future minimum lease payments attributable to the direct financing lease and the estimated residual value of the property, if any, less unearned income. Over the lease term, the investment in the direct financing lease is reduced and interest is recognized as revenue in “Fee and other” in the Consolidated Statements of Operations and Comprehensive Income and produces a constant periodic rate of return on the "Investment in financing leases, net".

Revenue from advisory services is generated from service contracts generally based on (i) time and expense arrangements (where the Company recognizes revenues based on hours incurred and contracted rates), (ii) fixed-fee arrangements (where the Company recognizes revenues earned to date by applying the proportional performance method) or (iii) performance-based or contingent arrangements (where the Company recognizes revenues at a point in time when the client receives the benefit of the promised service). Reimbursable expenses for the advisory services, including those relating to travel, out-of-pocket expenses, outside consultants and other outside service costs, are generally included in revenues and in general and administrative expenses in the period in which the expense is incurred.

Fair Value Measurements

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 have realized on disposition of the assets and liabilities as of June 30, 2023 and December 31, 2022. 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 and other assets (excluding derivatives), accounts payable and accrued expenses are carried at amounts which reasonably approximate their fair values as of June 30, 2023 and December 31, 2022 due to their short maturities.

The fair value of the Company’s borrowings under its Credit Facilities approximates carrying value because such borrowings are subject to a variable market rate, which reprices frequently. The fair value was determined using the Adjusted Term SOFR (as defined below) as of June 30, 2023 and December 31, 2022, plus an applicable spread under the Credit Facilities, a Level 2 classification in the fair value hierarchy. The fair value of the Company’s secured borrowings aggregated approximately $27.8 million and $27.5 million as compared to the principal balance of $33.0 million and $33.1 million as of June 30, 2023 and December 31, 2022, respectively. The fair value of the Company’s secured debt was categorized as a Level 3 fair value estimate (as provided by ASC 820, Fair Value Measurements and Disclosures). The fair value of the mortgage debt was determined by discounting the future contractual interest and principal payments by a market rate.

The Company's derivative assets and liabilities, comprised of interest rate swap derivative instruments entered into in connection with the Credit Facilities, are recorded at fair value based on a variety of observable inputs, including contractual terms, interest rate curves, yield curves, measure of volatility and correlations of such inputs. The Company measures its

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derivatives at fair value on a recurring basis based on the expected amount of future cash flows on a discounted basis and incorporating a measure of non-performance risk. The fair value of the Company's derivative assets and liabilities was categorized as a Level 2 fair value estimate (as provided by ASC 820, Fair Value Measurements and Disclosures). The Company considers its own credit risk, as well as the credit risk of its counterparties, when evaluating the fair value of its derivative assets and liabilities. As of June 30, 2023 and December 31, 2022, the fair value of the Company’s interest rate swap derivative assets was approximately $9.8 million and $9.2 million, respectively, included in “Prepaid expenses and other assets, net” on the Consolidated Balance Sheets.

Disclosures about fair value of assets and liabilities are based on pertinent information available to management as of June 30, 2023 and December 31, 2022. 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, 2023 and current estimates of fair value may differ significantly from the amounts presented herein.

Derivative Instruments and Hedging Activities

In accordance with ASC 815, Derivatives and Hedging, the Company records all derivative instruments on the Consolidated Balance Sheets at fair value. The accounting for changes in the fair value of derivatives depends on the intended use of the derivative, whether the Company has elected to designate a derivative in a hedging relationship and apply hedge accounting and whether the hedging relationship has satisfied the criteria necessary to apply hedge accounting. Derivatives designated and qualifying as a hedge of the exposure to variability in expected future cash flows are considered cash flow hedges. Hedge accounting generally provides for the matching of the timing of gain or loss recognition on the hedging instrument with the recognition of the changes in the fair value of the hedged asset or liability that are attributable to the hedged risk in a fair value hedge or the earnings effect of the hedged forecasted transactions in a cash flow hedge. The Company may enter into derivative contracts that are intended to economically hedge certain of its risks, even though hedge accounting does not apply or the Company elects not to apply hedge accounting. See Note 6. Derivatives and Hedging Activities for further details.

Impairment of Long-Lived Assets

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, 2023 and 2022.

Concentration of Credit Risks

As of June 30, 2023, the Company’s properties were leased primarily to a single tenant, the USPS. For the six months ended June 30, 2023, approximately 13.3% of the Company’s total rental income, or $3.9 million, was concentrated in Pennsylvania. For the six months ended June 30, 2022, approximately 16.1% of the Company's total rental income, or $3.8 million, was concentrated in Pennsylvania. The ability of the USPS to honor the terms of its leases is dependent upon regulatory, economic, environmental or competitive conditions in Pennsylvania or other regions where the Company operates in and could have a material effect on the Company’s overall business results.

The Company has deposited cash and maintains its bank deposits with large financial institutions in amounts that, from time to time, 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

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are measured at fair value at date of grant and remeasured at fair value only upon a modification of the award. The Company records forfeitures as a reduction of equity-based compensation expense as such forfeitures 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 to 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. Stockholders’ Equity for further details.

Insurance Accounting

The Company carries liability insurance to mitigate its exposure to certain losses, including those relating to property damage and business interruption. The Company records the estimated amount of expected insurance proceeds for property damage and other losses incurred as an asset (typically a receivable from the insurer) and income up to the amount of the losses incurred when the amount is determinable and approved by the insurance company. Any amount of insurance recovery in excess of the amount of the losses incurred is considered a gain contingency and is not recorded in other income until the amount is determinable and approved by the insurance company. Insurance recoveries for business interruption for lost revenue or profit are accounted for as gain contingencies in their entirety, and therefore are not recorded in income until the amount is determinable and approved by the insurance company.

Earnings per Share

The Company calculates earnings per share ("EPS") based upon the weighted average shares outstanding less issued and outstanding non-vested shares of Class A common stock. As of June 30, 2023 and 2022, the Company had unvested restricted shares of Class A common stock, long term incentive units of the Operating Partnership ("LTIP Units") and certain restricted stock units (“RSUs”), which provide for non-forfeitable rights to dividend and dividend equivalent payments. Accordingly, these unvested restricted shares of Class A common stock, LTIP Units and RSUs are considered participating securities and are included in the computation of basic and diluted EPS pursuant to the two-class method. Diluted EPS is calculated after giving effect to all potential dilutive shares outstanding during the period. See Note 10. Earnings Per Share for further details.

Recently Adopted Accounting Pronouncements

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 changed how entities measure credit losses for most financial assets and certain other instruments that are not measured at fair value through net income. The guidance replaced the previous "incurred loss" model with an "expected loss" approach. The guidance also requires entities to disclose information about how they developed the allowances, including changes in the factors that influenced 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 became effective for the Company and was adopted by the Company on January 1, 2023. Upon adoption of this guidance, the Company had two direct financing leases with a net investment balance aggregating approximately $16.1 million prior to any credit loss adjustment. Historically, the Company has had no collection issues related to these direct financing leases and its other leases in which the Company is the lessor; therefore, the Company assessed the probability of default on these leases based on the lessee’s status as an independent agency of the executive branch of the U.S. federal government, financial condition and business prospects and the remaining term of the leases. Based on the aforementioned, the Company did not recognize any credit loss adjustment for such leases.

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Note 3. Real Estate Acquisitions

The following tables summarizes the Company’s acquisitions for the six months ended June 30, 2023. 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 (in thousands, except for the number of properties):

Three Months Ended		Number of Properties	Land		Building and Improvements		Tenant Improvements		In-place lease intangibles		Above- market leases		Below- market leases		Other		Total (1)
2023
March 31, 2023	(2)	39	$	2,802	$	14,271	$	152	$	1,134	$	43	$	(826)	$	—	$	17,576
June 30, 2023	(3)	39	$	3,241	$	12,054	$	117	$	1,066	$	24	$	(483)	$	—	$	16,019
Total		78	$	6,043	$	26,325	$	269	$	2,200	$	67	$	(1,309)	$	—	$	33,595

Explanatory Notes:

(1)Includes closing costs of approximately $0.3 million for the three months ended March 31, 2023 and $0.2 million for the three months ended June 30, 2023.

(2)Includes the acquisition of 39 properties in various states for cash consideration in individual or portfolio transactions for a price of approximately $17.6 million, including closing costs.

(3)Includes the acquisition of 39 properties in various states in individual or portfolio transactions for a price of approximately $16.0 million, including closing costs, which was funded with both the issuance of OP Units to the sellers (valued at approximately $0.5 million using the share price of Class A common stock on the date of each issuance of such OP units) and cash consideration.

Note 4. Intangible Assets and Liabilities

The following table summarizes the Company’s intangible assets and liabilities:

As of	Gross Asset (Liability)		Accumulated Amortization		Net Carrying Amount
			(in thousands)
June 30, 2023:
In-place lease intangibles	$	42,274	$	(27,934)	$	14,340
Above-market leases	623		(238)		385
Below-market leases	(20,386)		8,511		(11,875)
December 31, 2022:
In-place lease intangibles	$	40,074	$	(24,387)	$	15,687
Above-market leases	556		(157)		399
Below-market leases	(19,077)		7,256		(11,821)

Amortization of in-place lease intangibles was $1.8 million and $3.5 million for the three and six months ended June 30, 2023, respectively, and $1.7 million and $3.5 million for the three and six months ended June 30, 2022, respectively. This amortization is included in “Depreciation and amortization” in the Consolidated Statements of Operations and Comprehensive Income.

Amortization of acquired above-market leases was $0.04 million and $0.08 million for the three and six months ended June 30, 2023, respectively, and $0.02 million and $0.04 million for the three and six months ended June 30, 2022, respectively,

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and is included in “Rental income” in the Consolidated Statements of Operations and Comprehensive Income. Amortization of acquired below-market leases was $0.6 million and $1.3 million for the three and six months ended June 30, 2023, respectively, and $0.5 million and $1.1 million for the three and six months ended June 30, 2022, respectively, and is included in “Rental income” in the Consolidated Statements of Operations and Comprehensive Income.

Future amortization/accretion of these intangibles is below (in thousands):

Year Ending December 31,	In-place lease intangibles		Above-market leases		Below-market leases
2023-Remaining	$	3,208	$	81	$	(1,233)
2024	5,085		124		(2,143)
2025	3,203		89		(1,566)
2026	1,837		67		(1,266)
2027	694		15		(990)
Thereafter	313		9		(4,677)
Total	$	14,340	$	385	$	(11,875)

Note 5. Debt

The following table summarizes the Company’s indebtedness as of June 30, 2023 and December 31, 2022 (dollars in thousands):

	Outstanding Balance as of June 30, 2023		Outstanding Balance as of December 31, 2022		Interest Rate at June 30, 2023		Maturity Date
Revolving Credit Facility(1)	$	29,000	$	—	SOFR+148 bps(2)		January 2026
2021 Term Loan(1)	50,000		50,000		SOFR+143 bps(2)		January 2027
2022 Term Loan(1)	115,000		115,000		SOFR+143 bps(2)		February 2028
Secured Borrowings:
Vision Bank(3)	1,409		1,409		3.69	%	September 2041
First Oklahoma Bank(4)	324		333		3.63	%	December 2037
Vision Bank – 2018(5)	844		844		3.69	%	September 2041
Seller Financing(6)	194		282		6.00	%	January 2025
AIG(7)	30,225		30,225		2.80	%	January 2031
Total Principal	226,996		198,093
Unamortized deferred financing costs	(1,287)		(1,431)
Total Debt	$	225,709	$	196,662

Explanatory Notes:

(1)On August 9, 2021, the Company entered into the Credit Facilities, which included the $150.0 million Revolving Credit Facility and the $50.0 million senior unsecured term loan facility (the "2021 Term Loan"). On May 11, 2022, the Company amended the Credit Facilities to, among other things, add a new $75.0 million senior unsecured delayed draw term loan facility (the "2022 Term Loan" and, together with the 2021 Term Loan, the "Term Loans"), replace the London Interbank Offered Rate with the Secured Overnight Financing Rate ("SOFR") as the benchmark interest rate and allow for a decrease in the applicable margin by 0.02% if the Company achieves certain sustainability targets. On December 6, 2022, the Company exercised $40.0 million of term loan accordion under the 2022 Term Loan. On July 24, 2023, the Company amended the Credit Facilities (the "Second Amendment") to, among other things, add a daily simple SOFR-based option to the term SOFR-based floating interest rate option as a benchmark rate for borrowings under the Credit Facilities and further exercised $25.0 million of term loan accordion under the 2021 Term Loan and, on a delayed-draw basis, $10.0 million of term loan accordion under the 2022 Term Loan.

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The Credit Facilities include an accordion feature which permits the Company to borrow up to an additional $150.0 million under the Revolving Credit Facility, subject to customary terms and conditions. Subsequent to June 30, 2023, the accordion feature under the Term Loans has been fully exercised. The Revolving Credit Facility matures in January 2026, which may be extended for two six-month periods subject to customary conditions, the 2021 Term Loan matures in January 2027 and the 2022 Term Loan matures in February 2028. Borrowings under the Credit Facilities carry an interest rate of, (i) in the case of the Revolving Credit Facility, either a base rate plus a margin ranging from 0.5% to 1.0% per annum or Adjusted Term SOFR (as defined below) plus a margin ranging from 1.5% to 2.0% per annum, or (ii) in the case of the Term Loans, either a base rate plus a margin ranging from 0.45% to 0.95% per annum or Adjusted Term SOFR plus a margin ranging from 1.45% to 1.95% per annum, in each case depending on the Company's consolidated leverage ratio. With respect to the Revolving Credit Facility, the Company will pay, if the usage is equal to or less than 50%, an unused facility fee of 0.20% per annum, or if the usage is greater than 50%, an unused facility fee of 0.15% per annum, in each case on the average daily unused commitments under the Revolving Credit Facility. The Credit Facilities contain a number of customary financial and non-financial covenants.

During the three and six months ended June 30, 2023, the Company incurred $0.07 million and $0.1 million, respectively, and, during the three and six months ended June 30, 2022, the Company incurred $0.06 million and $0.1 million, respectively, of unused facility fees related to the Revolving Credit Facility. As of June 30, 2023, the Company was in compliance with all of the Credit Facilities’ debt covenants.

(2)Based upon the one-month Adjusted Term SOFR, which is SOFR plus a term SOFR adjustment of 0.10%, subject to a 0% floor (the “Adjusted Term SOFR”). Upon the Company's achievement of certain sustainability targets for 2022, the applicable margins for the Credit Facilities were reduced by 0.02% for the year ending December 31, 2023, which is reflected in the margins noted in the table above.

(3)Five properties are collateralized under this loan and Mr. Spodek also provided a personal guarantee of payment for 50% of the outstanding amount thereunder. The loan has a fixed interest rate of 3.69% for the first five years with interest payments only (ending in October 2026), then adjusting every subsequent five year period thereafter with principal and interest payments to the rate based on the five year weekly average yield on United States Treasury securities adjusted to a constant maturity of five years, as made available to the Board of Governors of the Federal Reserve System (the "Five-Year Treasury Rate"), plus a margin of 2.75%, with a minimum annual rate of 2.75%.

(4)The loan is collateralized by first mortgage liens on four properties and a personal guarantee of payment by Mr. Spodek. The loan has a fixed interest rate of 3.625% for the first five years (ending in August 2026), then adjusting annually thereafter to a variable annual rate of Wall Street Journal Prime Rate with a minimum annual rate of 3.625%.

(5)The loan is collateralized by first mortgage liens on one property and a personal guarantee of payment by Mr. Spodek. The loan has a fixed interest rate of 3.69% for the first five years with interest payments only (ending in October 2026), then adjusting every subsequent five year period thereafter with principal and interest payments to the rate based on the Five-Year Treasury Rate, plus a margin of 2.75%, with a minimum annual rate of 2.75%.

(6)In connection with the acquisition of a property, the Company obtained seller financing secured by the property in the amount of $0.4 million requiring five annual payments of principal and interest of $0.1 million with the first installment due on January 2, 2021 based on a 6.0% interest rate per annum through January 2, 2025.

(7)The loan is secured by a first mortgage lien on an industrial property located in Warrendale, Pennsylvania. The loan has a fixed interest rate of 2.80% with interest-only payments for the first five years and fixed payments of principal and interest thereafter based on a 30-year amortization schedule.

The weighted average maturity date for the Company's indebtedness as of June 30, 2023 and December 31, 2022 was approximately 4.7 years and 5.5 years, respectively.

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The scheduled principal repayments of indebtedness as of June 30, 2023 are as follows (in thousands):

Year Ending December 31,	Amount
2023 - Remaining	$	9
2024	112
2025	118
2026	29,636
2027	50,774
Thereafter	146,347
Total	$	226,996

Note 6. Derivatives and Hedging Activities

As of June 30, 2023, the Company had five interest rate swaps with a total notional amount of $165.0 million that are used to manage its interest rate risk and fix the SOFR component on the Credit Facilities. Within the $165.0 million, $50.0 million of the swaps mature in January 2027 and fix the interest rate of the 2021 Term Loan at 2.27% as of June 30, 2023. An additional $50.0 million of the swaps mature in February 2028 and fix the first $50.0 million amount outstanding under the 2022 Term Loan at 4.217% as of June 30, 2023. An additional $25.0 million of the swaps mature in February 2028 and fix the additional $25.0 million amount outstanding under the 2022 Term Loan at 4.79% as of June 30, 2023. The remaining $40.0 million of the swaps mature in February 2028 and fix the remaining $40.0 million amount outstanding under the 2022 Term Loan at 4.932% as of June 30, 2023.

On July 24, 2023, in connection with the exercise of $25.0 million term loan accordion under the 2021 Term Loan, the Company further entered into an interest rate swap that effectively fixed the interest rate on the additional $25.0 million of the 2021 Term Loan through January 2027 at 5.736%.

The Company’s objectives in using the interest rate derivatives are to add stability to interest expense and to manage its exposure to interest rate movements. To accomplish these objectives, the Company uses the interest rate swaps as part of its interest rate risk management strategy. The interest rate swaps are designated as cash flow hedges, with any gain or loss recorded in “Accumulated other comprehensive income” on the Consolidated Balance Sheets and subsequently reclassified into interest expense as interest payments are made on the Credit Facilities. During the next twelve months, the Company estimates that an additional $4.7 million will be reclassified from “Accumulated other comprehensive income” as a decrease to interest expense.

The Company does not use derivatives for trading or speculative purposes and currently does not have any derivatives that are not designated as hedges.

The table below presents the effect of the Company’s interest rate swap derivative instruments in the Consolidated Statements of Operations and Comprehensive Income for the three and six months ended June 30, 2023 and 2022 (in thousands):

	For the Three Months Ended June 30,				For the Six Months Ended June 30,
Derivatives in Cash Flow Hedging Relationships (Interest Rate Swaps)	2023		2022		2023		2022
Amount of (loss) gain recognized on derivative in "Accumulated other comprehensive income"	$	4,491	$	375	$	2,553	$	2,801
Amount of gain (loss) reclassified from "Accumulated other comprehensive income" into interest expense	$	1,092	$	(129)	$	1,991	$	(214)

"Interest expense, net" presented in the Consolidated Statements of Operations and Comprehensive Income, in which the effects of cash flow hedges are recorded, totaled $2.5 million and $4.7 million for the three and six months ended June 30, 2023, respectively, and $1.3 million and $2.1 million for the three and six months ended June 30, 2022, respectively.

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Note 7. Leases

Lessor Accounting

As of June 30, 2023, the Company's properties were leased primarily to the USPS, with leases expiring at various dates through May 31, 2031. Certain leases had expired and were in holdover status as of June 30, 2023 as discussed below. Certain leases contain renewal, termination and/or purchase options exercisable at the lessee’s election. Therefore, such options are only recognized once they are deemed reasonably certain, typically at the time the option is exercised. All of the Company’s leases are operating leases with the exception of two that are direct financing leases. The Company's operating leases and direct financing leases are described below.

Rental income related to the Company’s leases is recognized on a straight-line basis over the remaining lease term. The Company’s total revenue includes fixed base rental payments provided under the lease and variable payments which principally consist of tenant expense reimbursements for certain property operating expenses, including real estate taxes. The Company elected the practical expedient to account for its lease and non-lease components as a single combined operating lease component under Topic 842. As a result, rental income and tenant reimbursements were aggregated into a single line within rental income in the Consolidated Statements of Operations and Comprehensive Income.

The following table represents rental revenue that the Company recognized related to its operating leases (in thousands):

	For the Three Months Ended June 30,				For the Six Months Ended June 30,
	2023		2022		2023		2022
Fixed payments	$	12,854	$	10,482	$	25,404	$	20,146
Variable payments	1,908		1,653		3,857		3,338
	$	14,762	$	12,135	$	29,261	$	23,484

Future minimum lease payments to be received as of June 30, 2023 under non-cancellable operating leases for the next five years and thereafter are as follows (in thousands):

Year Ending December 31,	Amount (1)(2)
2023 - Remaining	$	21,551
2024	40,391
2025	33,838
2026	25,414
2027	14,190
Thereafter	15,716
Total	$	151,100

Explanatory Notes:

(1)The above minimum lease payments to be received do not include reimbursements from tenants for real estate taxes and other reimbursed expenses.

(2)As of June 30, 2023, the leases at 115 of the Company's properties were expired, and the USPS was occupying such properties as a holdover tenant. As such, the above minimum lease payments to be received do not include payments under these holdover leases. Holdover rent is typically paid as the greater of estimated market rent or the rent amount due under the expired lease.

Purchase Option Provisions

As of June 30, 2023, operating leases for 67 of the Company’s properties provided the USPS with the option to purchase the underlying property either at fair market value or at fixed prices, in each case as of dates set forth in the lease agreement. As of June 30, 2023, 64 of these properties had an aggregate carrying value of approximately $49.2 million with an

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aggregate purchase option price of approximately $61.9 million and the remaining three properties had an aggregate carrying value of approximately $2.6 million with purchase options exercisable at fair market value.

Investment in Financing Leases, Net

As of June 30, 2023 and December 31, 2022, financing leases for two of the Company's properties provide the USPS with the option to purchase the underlying property at fixed prices as of dates set forth in the lease agreement. The components of the Company’s net investment in financing leases as of June 30, 2023 and December 31, 2022 are summarized in the table below (in thousands):

	As of June 30, 2023		As of December 31, 2022
Total minimum lease payment receivable	$	32,646	$	33,215
Less: unearned income	(16,563)		(17,085)
Investment in financing leases, net	$	16,083	$	16,130

Revenue earned under direct financing leases for the three and six months ended June 30, 2023 were $0.3 million and $0.5 million, respectively, and for the three and six months ended June 30, 2022 were $0.3 million and $0.6 million, respectively, which is recorded in "Fee and other" in the Consolidated Statements of Operations and Comprehensive Income.

Future lease payments to be received under the Company’s direct financing leases as of June 30, 2023 for the next five years and thereafter are as follows (in thousands):

Year Ending December 31,	Amount
2023 – Remaining	$	568
2024	1,137
2025	1,137
2026	1,137
2027	1,137
Thereafter	27,530
Total	$	32,646

Lessee Accounting

As a lessee, the Company has ground and office leases which were classified as operating leases. As of June 30, 2023, these leases had remaining terms, including renewal options, of one to 56 years and a weighted average remaining lease term of 22.1 years. Operating right-of-use ("ROU") assets and lease liabilities are included in “Prepaid expenses and other assets, net” and “Accounts payable, accrued expense and other, net” on the Consolidated Balance Sheets as follows (in thousands):

	As of June 30, 2023		As of December 31, 2022
ROU asset – operating leases	$	908	$	1,010
Lease liability – operating leases	$	914	$	1,014

The difference between the recorded ROU assets and lease liabilities is mainly due to the reclassification of the below market ground lease intangible asset which was included within the ROU assets recognized upon transition.

Operating lease assets and liabilities are measured at the commencement date based on the present value of future lease payments. As most of the Company’s leases do not provide an implicit rate, the Company uses its incremental borrowing rate based on the information available at the commencement date in determining the present value of future payments. The Company used a discount rate ranging from 4.25% to 6.37% based on the yield of its current borrowings in determining its lease liabilities.

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Lease expense for minimum lease payments is recognized on a straight-line basis over the lease term. The lease terms may include options to extend or terminate the lease if it is reasonably certain that the Company will exercise that option.

Operating lease expense for each of the three and six months ended June 30, 2023 and 2022 was $0.06 million and $0.1 million, respectively. See Note 9. Related Party Transactions for more details.

Future minimum lease payments to be paid by the Company as a lessee for operating leases as of June 30, 2023 for the next five years and thereafter are as follows (in thousands):

2023 — Remaining	$	124
2024	121
2025	46
2026	43
2027	43
Thereafter	1,387
Total future minimum lease payments	1,764
Interest discount	(850)
Total	$	914

Note 8. Income Taxes

TRS

In connection with the IPO, the Company and REAC jointly elected to treat REAC as a TRS. REAC performs management services, including for properties the Company does not own, and advisory services to third-party owners of postal properties. REAC generates income, resulting in federal and state corporate income tax liability for REAC. For the three and six months ended June 30, 2023, income tax expense related to REAC was $0.01 million and $0.03 million, respectively. For the three and six months ended June 30, 2022, income tax expense related to REAC was $0.02 million and $0.03 million, respectively.

Other

In connection with the IPO, the indirect sole shareholder of United Postal Holdings, Inc. ("UPH"), a portion of the Company's predecessor, 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.

As of December 31, 2022, the Company had remaining unrecognized tax benefits of $0.02 million, which were inclusive of interest and penalties, and a corresponding indemnification asset, which were included in "Prepaid expenses and other assets, net" on the Consolidated Balance Sheets. During the six months ended June 30, 2023, the Company reversed the remaining $0.02 million of unrecognized tax benefits and the corresponding indemnification asset due to the expiration of statute of limitations.

Note 9. Related Party Transactions

Management Fee Income

REAC recognized management fee income of $0.3 million and $0.6 million for the three and six months ended June 30, 2023 and 2022, respectively, from various parties which were affiliated with the Company's CEO. These amounts are included in “Fee and other” in the Consolidated Statements of Operations and Comprehensive Income. Accrued management fees receivable of $0.3 million as of June 30, 2023 and December 31, 2022, respectively, are included in “Rent and other receivables” on the Consolidated Balance Sheets.

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POSTAL REALTY TRUST, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

(CONTINUED)

Related Party Lease

On May 17, 2019, the Company entered into a lease for office space in Cedarhurst, New York with an entity affiliated with the Company’s CEO (the “Office Lease”). Pursuant to the Office Lease, the monthly rent is $15,000 subject to escalations. The term of the Office Lease is five years commencing on May 17, 2019 and will expire on May 16, 2024. Rental expenses associated with the Office Lease for each of the three and six months ended June 30, 2023 and 2022 were $0.05 million and $0.1 million, respectively, and was recorded in “General and administrative expenses” in the Consolidated Statements of Operations and Comprehensive Income. The Company determined this Office Lease was an operating lease. For further details, see Note 7. Leases.

Guarantees

As disclosed above in Note 5. Debt, Mr. Spodek personally guaranteed a portion of or the entire amount outstanding under the Company's loans with First Oklahoma Bank and Vision Bank, totaling $1.9 million and $1.9 million as of June 30, 2023 and December 31, 2022, respectively. As a guarantor, Mr. Spodek's interests with respect to the amount of debt he is guaranteeing (and the terms of any repayment or default) may not align with the Company’s interests and could result in a conflict of interest.

Note 10. Earnings Per Share

EPS is calculated by dividing net income attributable to common stockholders by the weighted average number of shares outstanding for the period.

The following table presents a reconciliation of income from operations used in the basic and diluted EPS calculations (dollars in thousands, except share and per share data).

	For the Three Months Ended June 30,				For the Six Months Ended June 30,
	2023		2022		2023		2022
Numerator for earnings per share – basic and diluted:
Net income attributable to common stockholders	$	1,012	$	953	$	1,360	$	1,548
Less: Income attributable to participating securities	(346)		(241)		(652)		(470)
Numerator for earnings per share — basic and diluted	$	666	$	712	$	708	$	1,078
Denominator for earnings per share – basic and diluted (1)	19,544,833		18,398,808		19,417,304		18,383,544
Basic and diluted earnings per share	$	0.03	$	0.04	$	0.04	$	0.06

Explanatory Note:

(1) Diluted EPS reflects the potential dilution of the conversion of obligations and the assumed exercises of securities including the effects of restricted shares and RSUs issued under the Company’s 2019 Equity Incentive Plan (the “Plan”) (See Note 11. Stockholders’ Equity). The effect of such shares and RSUs would not be dilutive and were not included in the computation of weighted average number of shares outstanding for the periods presented in the table above. OP Units and LTIP Units are redeemable for cash or, at the Company’s option, shares of Class A common stock on an one-for-one basis. The income allocable to such OP Units and LTIP Units is allocated on this same basis and reflected as non-controlling interests in these unaudited Consolidated Financial Statements. As such, the assumed conversion of these OP Units and LTIP Units would have no net impact on the determination of diluted EPS.

Note 11. Stockholders’ Equity

ATM Program

On November 4, 2022, the Company entered into separate open market sale agreements for its at-the-market offering program (the "ATM Program") with each of Jefferies LLC, BMO Capital Markets Corp., Janney Montgomery Scott LLC,

POSTAL REALTY TRUST, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

(CONTINUED)

Stifel, Nicolaus & Company, Incorporated and Truist Securities, Inc., as agents, pursuant to which the Company may offer and sell, from time to time, shares of its Class A common stock having an aggregate sales price of up to $50.0 million. The agreements also provide that the Company may enter into one or more forward sale agreements under separate master forward confirmations and related supplemental confirmations with affiliates of certain agents.

The following table summarizes the activity under the ATM Program for the period presented (dollars in thousands, except per share amounts). During the year ended December 31, 2022, 751,382 shares were issued under the ATM Program and the Company's previous at-the-market offering program. During the three and six months ended June 30, 2023, 265,225 shares and 320,307 shares were issued under the ATM program, respectively. During the three and six months ended June 30, 2022, the Company did not issue any shares under its previous at-the-market offering program. As of June 30, 2023, the Company had approximately $37.0 million remaining that may be issued under the ATM Program.

	Three Months Ended June 30, 2023		Six Months Ended June 30, 2023
Shares issued	265,225		320,307
Gross proceeds	$	3,996	$	4,823
Fees and issuance costs	(153)		(270)
Net proceeds received	$	3,843	$	4,553
Average gross sales price per share	$	15.07	$	15.06

Dividends

During the three and six months ended June 30, 2023, the Company's Board of Directors approved and the Company declared and paid dividends of $5.9 million and $11.8 million, respectively, to Class A common stockholders, Voting Equivalency stockholders, OP unitholders and LTIP unitholders, or $0.2375 per share or unit and $0.475 per share or unit, respectively, as shown in the table below.

Declaration Date	Record Date	Date Paid	Amount Per Share or Unit
February 1, 2023	February 15, 2023	February 28, 2023	$	0.2375
April 24, 2023	May 5, 2023	May 31, 2023	$	0.2375

Non-controlling Interests

Non-controlling interests in the Company represent OP Units held by the Company's prior investors and certain sellers of properties to the Company and LTIP Units primarily issued to the Company’s employees and the Board of Directors in connection with the IPO and/or in lieu of their cash compensation. During the six months ended June 30, 2023, the Company issued 143,288 LTIP Units to the Company’s CEO for his 2022 incentive bonus, his election to defer 100% of his 2023 annual salary and for long term incentive compensation, 75,489 LTIP Units to the Company’s president for his 2022 incentive bonus and his election to defer 50% of his 2023 annual salary, 57,057 LTIP Units to the Company's Chief Financial Officer for his 2022 incentive bonus and for long term incentive compensation, 40,635 LTIP Units in June 2023 to the Board of Directors for their annual retainers as compensation for their services as directors, 25,510 LTIP Units to an employee for his 2022 incentive bonus, his election to defer a portion of his 2023 annual salary and for long term incentive compensation and 3,304 LTIP Units to a consultant under the consultancy agreement with the Company.

As of June 30, 2023 and December 31, 2022, non-controlling interests consisted of 4,110,602 OP Units and 882,151 LTIP Units and 4,133,619 OP Units and 536,868 LTIP Units, respectively. This represented approximately 19.8% and 19.2% of the outstanding Operating Partnership units as of June 30, 2023 and December 31, 2022, respectively. OP Units and shares of Class A common stock generally have the same economic characteristics, as they share equally in the total net income or loss and distributions of the Operating Partnership. Beginning on or after the date which is 12 months after the date on which a person first became a holder of common units, each limited partner and assignees of limited partners will generally 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, shares of Class A common stock, on an one-for-one basis determined in accordance with and subject to adjustment under the partnership agreement.

POSTAL REALTY TRUST, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

(CONTINUED)

During the six months ended June 30, 2023, 22,798 OP Units were redeemed for 22,798 shares of Class A common stock. For redemption of OP Units using shares of Class A common stock, the Company adjusted the carrying value of non-controlling interests to reflect its share of the book value of the Operating Partnership reflecting the change in the Company’s ownership of the Operating Partnership. Such adjustments are recorded to additional paid-in capital as a reallocation of non-controlling interest in the Consolidated Statements of Changes in Equity. During the six months ended June 30, 2023, 37,500 OP Units were also redeemed for cash for the total amount of $0.6 million.

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 Plan, the Company may grant equity incentive awards to its directors, officers, employees and consultants. As of June 30, 2023, the remaining shares available under the Plan for future issuance was 1,038,299. 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 the Company's outstanding restricted shares of Class A common stock, LTIP Units and RSUs. The balance as of June 30, 2023 represents unvested restricted shares of Class A common stock and LTIP Units and RSUs that are outstanding, whether vested or not:

	Restricted Shares (1)(2)	LTIP Units (3)	RSUs (4)	Total Shares/Units/RSUs	Weighted Average Grant Date Fair Value
Outstanding, as of January 1, 2023	449,076	536,868	229,500	1,215,444	$	16.12
Granted	123,801	345,283	110,968	580,052	$	15.56
Vesting of restricted shares and RSUs(5)	(56,940)	—	(27,456)	(84,396)	$	12.17
Forfeited	(5,004)	—	(11,216)	(16,220)	$	8.51
Outstanding, as of June 30, 2023	510,933	882,151	301,796	1,694,880	$	16.20

Explanatory Notes:    

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

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

(3)Includes 143,288 LTIP Units granted to the Company’s CEO, 75,489 LTIP Units granted to the Company’s president and 57,057 LTIP Units granted to the Company's Chief Financial Officer, which vest over three years or cliff vest at the end of eight years. Also includes 25,510 LTIP Units granted to an employee of the Company, a portion of which will vest on December 31, 2023 with the remaining to vest over three years or cliff vest at the end of eight years, 40,635 LTIP Units granted to the Company's independent directors that vest over three years or cliff vest at the end of three years and 3,304 LTIP Units granted to a consultant under the consultancy agreement with the Company that vested on June 30, 2023.

(4)Includes 63,512 RSUs granted to certain officers and employees of the Company during the six months ended June 30, 2023, 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 performance-based hurdles relating to the Company’s specified absolute and relative total stockholder return goals and continued employment with the Company over the approximately three-year period from the grant date through December 31, 2025. 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 46,258 time-based RSUs issued for 2022 incentive bonuses to certain employees that vested fully on January 31, 2023, the date of grant, and 1,197 time-based

POSTAL REALTY TRUST, INC.

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(CONTINUED)

RSUs granted to certain employees for their election to defer a portion of their 2023 salary that will vest on December 31, 2023. RSUs reflect the right to receive shares of Class A common stock, subject to the applicable vesting criteria.

(5)Includes 63,086 of restricted shares and RSUs that vested and 21,310 shares of restricted shares that were withheld to satisfy minimum statutory withholding requirements. 

During the year ended December 31, 2020, the Company issued 38,672 RSUs (the “2020 Performance-Based Awards”) to certain employees that were market-based awards and subject to the achievement of performance-based hurdles relating to the Company’s absolute total stockholder return goals and continued employment with the Company over the approximately three-year performance period ended December 31, 2022. In January 2023, the Company's Corporate Governance and Compensation Committee of the Board of Directors determined that the Company's total stockholder return for such three-year performance period exceeded the threshold performance hurdles for the 2020 Performance-Based Awards and, as a result, approved the payout of (i) 27,456 RSUs for such awards, which were settled using the Company’s shares of Class A common stock, and (ii) their cash dividends for the three-year performance period.

During the three and six months ended June 30, 2023, the Company recognized compensation expense of $1.2 million and $2.8 million, respectively, in “General and administrative expenses” and $0.1 million and $0.4 million, respectively, in "Property operating expenses" in the Consolidated Statements of Operations and Comprehensive Income related to all awards. During the three and six months ended June 30, 2022, the Company recognized compensation expense of $0.9 million and $2.4 million, respectively, in “General and administrative expenses” and $0.1 million and $0.3 million, respectively, in "Property operating expenses" in the Consolidated Statements of Operations and Comprehensive Income related to all awards.

As of June 30, 2023, there was $17.4 million of total unrecognized compensation cost related to unvested awards, which is expected to be recognized over a weighted average period of 5.25 years.

In July 2023, the Company issued 9,941 RSUs and 7,370 restricted shares of Class A common stock to certain employees for their elections to receive such RSUs and restricted shares in lieu of a portion of their 2023 annual salaries pursuant to the Company's Alignment of Interest Program. The RSUs issued to employees in lieu of salaries will cliff vest on December 31, 2023, while the other restricted shares of Class A common stock issued to employees in lieu of salaries will cliff vest on the fifth or eighth anniversary of July 1, 2023. In addition, in July 2023, the Company issued 5,143 LTIP Units to a consultant under the consultancy agreement with the Company.

Employee Stock Purchase Plan

The Company's ESPP allows its employees to purchase shares of the Class A common stock at a discount. A total of 100,000 shares of Class A common stock was reserved for sale and authorized for issuance under the ESPP. The Code permits the Company to provide up to a 15% discount on the lesser of the fair market value of such shares of Class A common stock at the beginning of the offering period and the close of the offering period. As of June 30, 2023 and December 31, 2022, 36,156 and 29,710 shares have been issued under the ESPP since commencement, respectively. During the three and six months ended June 30, 2023, the Company recognized compensation expense of $0.01 million and $0.02 million, respectively, related to the ESPP. During the three and six months ended June 30, 2022, the Company recognized compensation expense of $1,625 and $0.02 million, respectively, related to the ESPP.

Note 12. Commitments and Contingencies 

As of June 30, 2023, the Company was not involved in any litigation nor to its knowledge is any litigation threatened against the Company that, in management’s opinion, would result in any material adverse effect on the Company’s financial position and results of operations, 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.

POSTAL REALTY TRUST, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

(CONTINUED)

Note 13. Business Acquisition

On March 4, 2022, the Company acquired a postal real estate consulting business and its employees through the issuance of 79,794 OP Units and $0.2 million in cash for an aggregate purchase price of approximately $1.7 million to complement the Company's core business of acquiring, managing, servicing and being a consolidator of postal properties.

In connection with the acquisition, the Company recorded an intangible asset related to the customer relationships and trade name of approximately $0.2 million in “Prepaid expenses and other assets, net” on the Consolidated Balance Sheets, which is being amortized over the estimated useful life of four years, and goodwill of approximately $1.5 million. The goodwill recorded is deductible for income tax purposes. All assets acquired in connection with the business acquisition were assigned to the Company’s single reportable segment. The results of operations of this acquired business have been included since the acquisition date. Pro forma information has not been presented for this business acquisition because such information is not material to the financial statements.

Note 14. Subsequent Events

The Company's Board of Directors approved, and on July 26, 2023, the Company declared a second quarter common stock dividend of $0.2375 per share, which is payable on August 31, 2023 to stockholders of record as of August 7, 2023.

On July 24, 2023, the Company entered into the Second Amendment to the Credit Facilities. See Note 5. Debt for additional details. As of August 7, 2023, the Company had $190.0 million drawn on the Credit Facilities, with $75.0 million drawn on the 2021 Term Loan, $115.0 million drawn on the 2022 Term Loan and no amount drawn on the Revolving Credit Facility.

As of August 7, 2023 and during the period subsequent to June 30, 2023, the Company issued 514,997 shares of its Class A common stock under the ATM Program for gross proceeds of approximately $7.7 million and also entered into forward sales transactions under the ATM Program for the sale of an additional 798,847 shares of its Class A common stock for gross proceeds of approximately $12.0 million.

As of August 7, 2023 and during the period subsequent to June 30, 2023, the Company acquired 15 properties for approximately $6.2 million, excluding closing costs.

As of August 7, 2023 and during the period subsequent to June 30, 2023, the Company had entered into definitive agreements to acquire 15 properties for approximately $3.9 million. However, the Company can provide no assurances that the acquisitions of these properties will be consummated on the terms and timing the Company expects, or at all.

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 Financial Statements and the related notes thereto of Postal Realty Trust, Inc. contained in this Quarterly Report on Form 10-Q and our Annual Report on Form 10-K for the year ended December 31, 2022.

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, of which we are the sole general partner and which we refer to in this section as our Operating Partnership.

Forward-Looking Statements 

This Quarterly Report on Form 10-Q contains “forward-looking statements” within the meaning of federal securities laws. In particular, statements pertaining to our capital resources, acquisitions, property performance and results of operations contain 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 United States Postal Service (“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 or lease renewals on the terms and timing we expect, or at all;

•the solvency and financial health of the USPS;

•defaults on, early terminations of or non-renewal of leases or actual, potential or threatened relocation, closure or consolidation of postal offices or delivery units 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;

•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 interest rates and increased operating costs;

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•general economic conditions (including inflation, rising interest rates, uncertainty regarding ongoing conflict between Russia and Ukraine and their related impact on macroeconomic 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 real estate investment trusts (“REITs”) in general;

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

•cybersecurity threats;

•uncertainties and risks related to adverse weather conditions, natural disasters and climate change;

•exposure to liability relating to environmental and health and safety matters;

•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 maintain our status as a REIT and our failure to maintain such status; and

•public health threats such as the coronavirus (COVID-19) pandemic.

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, you should carefully review and consider (i) the information contained under Item 1A titled “Risk Factors” herein and in our Annual Report on Form 10-K and (ii) such similar information as may be contained in our other reports and filings that we make with the Securities and Exchange Commission (the “SEC”).

Overview

Company

We were formed as a Maryland corporation on November 19, 2018 and commenced operations upon completion of our initial public offering and the related 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. During the six months ended June 30, 2023, we acquired 78 properties leased to the USPS for approximately $33.6 million, including closing costs. As of June 30, 2023, our portfolio consists of 1,364 owned properties, located in 49 states and one territory and comprising approximately 5.6 million net leasable interior square feet.

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We are the sole general partner of our Operating Partnership through which our properties are directly or indirectly owned. As of August 7, 2023, we owned approximately 80.9% of outstanding common units of limited partnership interest in our Operating Partnership (the “OP Units”), including long term incentive units of our Operating Partnership (the “LTIP Units”). Our Board of Directors oversees our business and affairs.

ATM Program

On November 4, 2022, we entered into separate open market sale agreements for our at-the-market offering program (the "ATM Program") with each of Jefferies LLC, BMO Capital Markets Corp., Janney Montgomery Scott LLC, Stifel, Nicolaus & Company, Incorporated and Truist Securities, Inc., as agents, pursuant to which we may offer and sell, from time to time, shares of our Class A common stock having an aggregate sales price of up to $50.0 million. The agreements also provide that we may enter into one or more forward sale agreements under separate master forward confirmations and related supplemental confirmations with affiliates of certain agents. During the six months ended June 30, 2023, 320,307 shares were issued under the ATM Program. As of June 30, 2023, we had approximately $37.0 million of availability remaining under the ATM Program.

Executive Overview

We are an internally managed REIT with a focus on acquiring and managing properties leased primarily to the USPS, ranging from last-mile post offices to larger industrial facilities. We believe the overall opportunity for consolidation that exists within the postal logistics network 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.

Geographic Concentration

As of June 30, 2023, we owned a portfolio of 1,364 properties located in 49 states and one territory and leased primarily to the USPS. For the six months ended June 30, 2023, approximately 13.3% of our total rental income was concentrated in Pennsylvania.

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. In other words, an emerging growth company can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. 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 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 $1.235 billion (subject to periodic adjustment for inflation), (ii) the last day of the fiscal year following the fifth anniversary of our IPO, (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 Securities Exchange Act of 1934, as amended (the “Exchange Act”).

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 elected to be treated as a REIT under the Internal Revenue Code of 1986, as amended (the “Code”), beginning with our short taxable year ended December 31, 2019 and intend to continue to qualify as a REIT. As long as we qualify as a

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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.

Factors That May Influence Future Results of Operations

The USPS

We are dependent on the USPS’ 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 and pricing, mandate certain expenses and cap its borrowing capacity. As a result, among other consequences, the USPS is unable to fund its mandated expenses and continues to be subject to mandated payments to its retirement system and benefits. While the USPS has recently undertaken, and proposes to undertake, a number of operational reforms and cost reduction measures, such as higher rates and slower deliveries for certain services and closure, relocation or consolidation of certain facilities and delivery units, the USPS has taken the position such measures alone will not be sufficient to maintain its ability to meet all of its existing obligations when due or allow it to make the critical infrastructure investments that have been deferred in recent years. These measures have also led to significant criticism and litigation, which may result in reputational or financial harm or increased regulatory scrutiny of the USPS or reduced demand for its services. The COVID-19 pandemic and measures taken to prevent its spread have also had a material and unpredictable effect on the USPS’ operations and liquidity, including significant additional operating expenses caused by pandemic-related disruptions. The COVID-19 pandemic and other geopolitical and economic factors have also created significant inflationary pressures resulting in higher compensation, benefits, transportation and fuel costs for the USPS. If the USPS becomes unable to meet its financial obligations or its revenue declines due to reduced demand for its services, the USPS may reduce its demand for leasing postal properties, which would have a material adverse effect on our business and operations. For additional information regarding the risks associated with the USPS, see the section entitled “Risk Factors - Risks Related to the USPS” under Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2022.

Revenues

We derive revenues primarily from rent and tenant reimbursements under leases with the USPS for our properties and fee and other from the management of postal properties owned by Andrew Spodek, our chief executive officer, and his affiliates managed by our taxable REIT subsidiary (“TRS”), income recognized from properties accounted for as financing leases and revenue from providing certain advisory services. Rental income represents the lease revenue recognized under the leases primarily with the USPS which includes the impact of above and below market lease intangibles as well as reimbursements to us made by our tenants for the real estate taxes paid at each property where tenants are responsible for such taxes under the leases. Certain of our leases include annual rent escalators. Fee and other principally represents (i) revenue our TRS received from postal properties owned by Mr. Spodek and his affiliates pursuant to the management agreements and is a percentage of the lease revenue for the managed properties, (ii) revenue our TRS received from providing advisory services to third-party owners of postal properties and (iii) income recognized from properties accounted for as financing leases. As of June 30, 2023, properties leased to our tenants had an average remaining lease term of approximately 3.3 years. Factors that could affect our rental income and fee and other 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, postal space; (iv) changes in market rental rates; (v) changes to the USPS’ 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 primarily to the USPS. The majority of our leases are modified double-net leases, whereby the tenant is responsible for utilities, routine maintenance and reimbursement of property taxes and the landlord is responsible for insurance, 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 “Lease Renewal” below 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, inflation 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 the related property 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.

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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 expense represents personnel costs, professional fees, legal fees, insurance, consulting fees, information technology costs and other expenses related to our day-to-day activities of being a public company. 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.

Equity-Based Compensation Expense

All equity-based compensation expense is recognized in our Consolidated Statements of Operations and Comprehensive Income as components of general and administrative expense and property operating expenses. We issue share-based awards to align our directors' and employees’ interests with those of our investors.

Indebtedness and Interest Expense

On August 9, 2021, we entered into a $150.0 million senior unsecured revolving credit facility (the "Revolving Credit Facility") and a $50.0 million senior unsecured term loan facility (the "2021 Term Loan"). On May 11, 2022, we amended the Credit Facilities (the "First Amendment") to, among other things, add a new $75.0 million senior unsecured delayed draw term loan facility (the "2022 Term Loan" and, together with the Revolving Credit Facility and the 2021 Term Loan, the “Credit Facilities”), replace the London Interbank Offered Rate with the Secured Overnight Financing Rate ("SOFR") as the benchmark interest rate and allow for a decrease in the applicable margin by 0.02% if we achieve certain sustainability targets. On December 6, 2022, we exercised $40.0 million of term loan accordion under the 2022 Term Loan. On July 24, 2023, we amended the Credit Facilities (the "Second Amendment") to, among other things, add a daily simple SOFR-based option to the term SOFR-based floating interest rate option as a benchmark rate for borrowings under the Credit Facilities and further exercised $25.0 million of term loan accordion under the 2021 Term Loan and, on a delayed-draw basis, $10.0 million of term loan accordion under the 2022 Term Loan.

We intend to use the Credit Facilities for working capital purposes, which may include repayment of mortgage indebtedness, property acquisitions and other general corporate purposes. We amortize on a non-cash basis the deferred financing costs associated with our 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 though 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 our existing TRS and any other TRS we form in the future will be subject to federal, state and local corporate income tax.

Lease Renewal

As of August 7, 2023, the leases at 116 of our properties, representing approximately 666,000 net leasable interior square feet, were expired and the USPS was occupying such properties as a holdover tenant. As of the date of this report, the USPS had not vacated or notified us of its intention to vacate any of these 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.

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In 2022, in connection with our lease renewal negotiations with the USPS, we filed claims with the USPS regarding market rent and other amounts due under the expired leases during the holdover period. The USPS subsequently determined that market rent for the expired leases was generally greater than the rent amount under the expired leases and agreed to pay us (i) a lump sum catch-up payment for increased rents from the date of lease expiration and (ii) increased rents reflecting the market rent determined by USPS going forward. However, because the USPS did not accept market rent based on our estimate and other amounts in our claims, we appealed such decisions before the Postal Service Board of Contract Appeals (“PSBCA”) within the period prescribed in the Contract Disputes Act of 1978. The PSBCA subsequently granted a joint request by the USPS and us to stay the appeals to enable further negotiations between the parties regarding the renewal of the expired leases. As of the date of this report, we agreed in a letter of intent to preliminary terms on rental rates for 86 properties with leases that had expired in 2022 and had begun executing renewals for such leases. However, for the properties still subject to the letter of intent, we had not entered into any definitive documentation with respect to the rental rates or lease renewals for these properties and there can be no guarantee that any lease renewals that we enter into with the USPS will reflect our expectations with respect to terms or timing.

While we currently anticipate that we will renew the leases that have expired or will expire, there can be no guarantee that we will be successful in renewing these leases, obtaining positive rent renewal spreads or renewing the leases on terms comparable to those of the expiring leases. Even 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 under our Credit Facilities, which could have a material adverse effect on our financial condition, results of operations and ability to make distributions to shareholders. Refer to “Risk Factors - Risks Related to the USPS” under Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2022 for additional information regarding the risks associated with the USPS.

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Results of Operations

Comparison of the Three Months Ended June 30, 2023 and the Three Months Ended June 30, 2022

	For the Three Months Ended June 30,
(Amounts in thousands)	2023		2022		$ Change		% Change
Revenues
Rental income	$	14,762	$	12,135	$	2,627	21.6	%
Fee and other	695		589		106		18.0	%
Total revenues	15,457		12,724		2,733		21.5	%
Operating expenses
Real estate taxes	2,029		1,705		324		19.0	%
Property operating expenses	1,414		1,230		184		15.0	%
General and administrative	3,610		3,309		301		9.1	%
Depreciation and amortization	4,781		4,219		562		13.3	%
Total operating expenses	11,834		10,463		1,371		13.1	%
Income from operations	3,623		2,261		1,362		60.2	%
Other income	125		187		(62)		(33.2)	%
Interest expense, net
Contractual interest expense	(2,302)		(1,111)		(1,191)		107.2	%
Write-off and amortization of deferred financing fees	(165)		(155)		(10)		6.5	%
Interest income	1		1		—		—	%
Total interest expense, net	(2,466)		(1,265)		(1,201)		94.9	%
Income before income tax expense	1,282		1,183		99		8.4	%
Income tax expense	(21)		(18)		(3)		16.7	%
Net income	$	1,261	$	1,165	$	96	8.2	%

Revenues

Rental income – Rental income includes net rental income as well as the recovery of certain operating costs and property taxes from tenants. Rental income increased by $2.6 million to $14.8 million for the three months ended June 30, 2023 from $12.1 million for the three months ended June 30, 2022, primarily due to the volume of our acquisitions.

Fee and other – Fee and other revenue increased by $0.1 million to $0.7 million for the three months ended June 30, 2023 from $0.6 million for the three months ended June 30, 2022, primarily due to income received from advisory services.

Operating Expenses

Real estate taxes – Real estate taxes increased by $0.3 million to $2.0 million for the three months ended June 30, 2023 from $1.7 million for the three months ended June 30, 2022, primarily due to the volume of our acquisitions.

Property operating expenses – Property operating expenses increased by $0.2 million to $1.4 million for the three months ended June 30, 2023 from $1.2 million for the three months ended June 30, 2022. Property management expenses are included within property operating expenses remained flat for the three months ended June 30, 2023 compared to the three months ended June 30, 2022. The increase in property operating expenses of $0.2 million was related to an increase in repairs and maintenance.

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General and administrative – General and administrative expenses increased by $0.3 million to $3.6 million for the three months ended June 30, 2023 from $3.3 million for the three months ended June 30, 2022, primarily due to expanding our staff, an increase in information technology related costs as a result of our continued growth and an increase in equity-based compensation expense related to awards that have been granted to our employees throughout 2022 and 2023.

Depreciation and amortization – Depreciation and amortization expense increased by $0.6 million to $4.8 million for the three months ended June 30, 2023 from $4.2 million for three months ended June 30, 2022, primarily due to the volume of our acquisitions.

Other Income

Other income primarily includes insurance recoveries related to property damage claims. Other income decreased by $0.1 million to $0.1 million for the three months ended June 30, 2023 from $0.2 million for the three months ended June 30, 2022, primarily due to lower insurance recoveries.

Total Interest Expense, Net

During the three months ended June 30, 2023, we incurred total interest expense, net of $2.5 million compared to $1.3 million for the three months ended June 30, 2022. The increase in interest expense is primarily related to additional borrowings under the Credit Facilities and increased interest rates.

Comparison of the Six Months Ended June 30, 2023 and Six Months Ended June 30, 2022

	For the Six Months Ended June 30,
	2023		2022		$ Change		% Change
Revenues
Rental income	$	29,261	$	23,484	$	5,777	24.6	%
Fee and other	1,344		1,171		173		14.8	%
Total revenues	30,605		24,655		5,950		24.1	%
Operating expenses
Real estate taxes	4,012		3,295		717		21.8	%
Property operating expenses	3,038		2,760		278		10.1	%
General and administrative	7,769		6,950		819		11.8	%
Depreciation and amortization	9,618		8,329		1,289		15.5	%
Total operating expenses	24,437		21,334		3,103		14.5	%
Income from operations	6,168		3,321		2,847		85.7	%
Other income	239		674		(435)		(64.5)	%
Interest expense, net
Contractual interest expense	(4,347)		(1,797)		(2,550)		141.9	%
Write-off and amortization of deferred financing fees	(330)		(284)		(46)		16.2	%
Interest income	1		1		—		—	%
Total interest expense, net	(4,676)		(2,080)		(2,596)		124.8	%
Income before income tax expense	1,731		1,915		(184)		(9.6)	%
Income tax expense	(37)		(29)		(8)		27.6	%
Net income	$	1,694	$	1,886	$	(192)	(10.2)	%

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Revenues

Rental income includes net rental income as well as the recovery of certain operating costs and property taxes from tenants. Rental income increased by $5.8 million to $29.3 million for the six months ended June 30, 2023 from $23.5 million for the six months ended June 30, 2022, primarily due to the volume of our acquisitions.

Fee and other. Other revenue increased by $0.2 million to $1.3 million for the six months ended June 30, 2023 from $1.2 million for the six months ended June 30, 2022, primarily due to income received from properties accounted for as financing leases and income received from advisory services.

Operating Expense

Real estate taxes – Real estate taxes increased by $0.7 million to $4.0 million for the six months ended June 30, 2023 from $3.3 million for the six months ended June 30, 2022, primarily due to the volume of our acquisitions.

Property operating expenses – Property operating expenses increased by $0.3 million to $3.0 million for the six months ended June 30, 2023 from $2.8 million for the six months ended June 30, 2022. Property management expenses are included within property operating expenses and increased by $0.2 million to $1.3 million for the six months ended June 30, 2023 from $1.1 million for the six months ended June 30, 2022. The remainder of the increase of $0.1 million is related to expenses for repairs and maintenance and insurance, which increase is due to the volume of our acquisitions.

General and administrative – General and administrative expenses increased by $0.8 million to $7.8 million for the six months ended June 30, 2023 from $7.0 million for the six months ended June 30, 2022 primarily due to expanding our staff, an increase in information technology related costs as a result of our continued growth and an increase in equity-based compensation expense related to awards that have been granted to our employees throughout 2022 and 2023.

Depreciation and amortization – Depreciation and amortization expense increased by $1.3 million to $9.6 million for the six months ended June 30, 2023 from $8.3 million for the six months ended June 30, 2022, primarily due to the volume of our acquisitions.

Other Income

Other income primarily includes insurance recoveries related to property damage claims. Other income decreased by $0.4 million to $0.2 million for the six months ended June 30, 2023 from $0.7 million for the six months ended June 30, 2022, primarily due to lower insurance recoveries.

Total Interest Expense, Net

During the six months ended June 30, 2023, we incurred total interest expense, net of $4.7 million compared to $2.1 million for the six months ended June 30, 2022. The increase in interest expense is primarily related due to additional borrowings under the Credit Facilities and increased interest rates.

Cash Flows

Comparison of the Six Months Ended June 30, 2023 and the Six Months Ended June 30, 2022

We had $2.2 million of cash and $0.8 million of escrows and reserves as of June 30, 2023 compared to $4.6 million of cash and $1.4 million of escrows and reserves as of June 30, 2022.

Cash flows from operating activities – Net cash provided by operating activities increased by $1.6 million to $14.6 million for the six months ended June 30, 2023 compared to $13.1 million for the same period in 2022. The increase is primarily due to the volume our acquisitions, all of which have generated additional rental income and related changes in working capital.

Cash flows to investing activities – Net cash used in investing activities for the six months ended June 30, 2023 primarily consisted of $32.9 million of acquisitions and $1.2 million of escrow deposits for acquisition and construction, capital improvements and other investing activities. Net cash used in investing activities for the six months ended June 30, 2022 primarily consisted of $79.9 million of acquisitions and $3.0 million of escrow deposits for acquisition and construction, capital improvements and other investing activities, offset by $0.6 million of insurance proceeds that were received.

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Cash flows from financing activities – Net cash provided by financing activities decreased by $47.8 million to $20.4 million for the six months ended June 30, 2023 compared to $68.1 million for the six months ended June 30, 2022. The decrease was primarily related to proceeds received on the 2022 Term Loan in 2022, offset by an increase in 2023 of borrowings under the Revolving Credit Facility and an increase in net proceeds received from issuance of shares in 2023.

Liquidity and Capital Resources

We had approximately $2.2 million of cash and $0.8 million of escrows and reserves as of June 30, 2023.

Revolving Credit Facility and Term loans

On August 9, 2021, we entered into the Credit Facilities, which include the $150.0 million Revolving Credit Facility and the $50.0 million 2021 Term Loan, with Bank of Montreal, as administrative agent, and BMO Capital Markets Corp., M&T Bank, JPMorgan Chase Bank, N.A. and Truist Securities, Inc. as joint lead arrangers and joint book runners. Additional participants in the Credit Facilities include Stifel Bank & Trust and TriState Capital Bank. On May 11, 2022, we entered into the First Amendment to, among other things, add the 2022 Term Loan (and, together with the 2021 Term Loan, the "Term Loans"). On December 6, 2022, we exercised $40.0 million of accordion feature under the 2022 Term Loan. On July 24, 2023, we entered into the Second Amendment and further exercised $25.0 million of term loan accordion under the 2021 Term Loan and, on a delayed-draw basis, $10.0 million of term loan accordion under the 2022 Term Loan.

As of June 30, 2023, we had $194.0 million of aggregate principal amount outstanding under our Credit Facilities, with $50.0 million drawn on the 2021 Term Loan, $115.0 million drawn on the 2022 Term Loan and $29.0 million drawn on the Revolving Credit Facility.

The Credit Facilities include an accordion feature which permit us to borrow up to an additional $150.0 million under the Revolving Credit Facility subject to customary terms and conditions. Subsequent to June 30, 2023, the accordion feature under the Term Loans has been fully exercised. The Revolving Credit Facility matures in January 2026, which may be extended for two six-month periods subject to customary conditions, the 2021 Term Loan matures in January 2027 and the 2022 Term Loan matures in February 2028. Borrowings under the Credit Facilities carry an interest rate of, (i) in the case of the Revolving Credit Facility, either a base rate plus a margin ranging from 0.5% to 1.0% per annum or Adjusted Term SOFR (as defined below) plus a margin ranging from 1.5% to 2.0% per annum, or (ii) in the case of the Term Loans, either a base rate plus a margin ranging from 0.45% to 0.95% per annum or Adjusted Term SOFR plus a margin ranging from 1.45% to 1.95% per annum, in each case depending on a consolidated leverage ratio. With respect to the Revolving Credit Facility, we will pay, if the usage is equal to or less than 50%, an unused facility fee of 0.20% per annum, or if the usage is greater than 50%, an unused facility fee of 0.15% per annum, in each case on the average daily unused commitments under the Revolving Credit Facility.

The Credit Facilities are guaranteed, jointly and severally, by us and certain of our indirect subsidiaries and contain customary covenants that, among other things, restrict, subject to certain exceptions, our ability to incur indebtedness, grant liens on assets, make certain types of investments, engage in acquisitions, mergers or consolidations, sell assets, enter into certain transactions with affiliates and pay dividends or make distributions. The Credit Facilities require compliance with consolidated financial maintenance covenants to be tested quarterly, including a minimum fixed charge coverage ratio, maximum total leverage ratio, minimum tangible net worth, maximum secured leverage ratio, maximum unsecured leverage ratio, minimum unsecured debt service coverage ratio and maximum secured recourse leverage ratio. The Credit Facilities also contain certain customary events of default, including the failure to make timely payments under the Credit Facilities, 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. As of June 30, 2023, we were in compliance with all of the Credit Facilities’ debt covenants.

As of June 30, 2023, we had five interest rate swaps with a total notional amount of $165.0 million that are used to manage our interest rate risk and fix the SOFR component on the Credit Facilities (together, the "Interest Rate Swaps"). Within the $165.0 million, $50.0 million of the swaps mature in January 2027 and fix the interest rate of the 2021 Term Loan at 2.27% as of June 30, 2023. An additional $50.0 million of the swaps mature in February 2028 and fix the first $50.0 million amount outstanding under the 2022 Term Loan at 4.217% as of June 30, 2023. An additional $25.0 million of the swaps mature in February 2028 and fix the additional $25.0 million amount outstanding under the 2022 Term Loan at 4.79% as of June 30,

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2023. The remaining $40.0 million of the swaps mature in February 2028 and fix the remaining $40.0 million amount outstanding under the 2022 Term Loan at 4.932% as of June 30, 2023.

On July 24, 2023, in connection with the exercise of $25.0 million term loan accordion under the 2021 Term Loan, we further entered into an interest rate swap that effectively fixed the interest rate on the additional $25.0 million of the 2021 Term Loan through January 2027 at 5.736%.

Capital Resources and Financing Strategy

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 Facilities and the potential issuance of securities. We have an effective shelf registration statement on file with the SEC under which we may issue equity financing through the instruments and on the terms most attractive to us at such time, including through our $50.0 million ATM Program.

Our long-term liquidity requirements primarily consist of funds necessary for the repayment of debt at maturity, distributions to our limited partners and distributions to our stockholders required to qualify for REIT status, 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 Facilities 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 Facilities 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.

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Consolidated Indebtedness

As of June 30, 2023, we had approximately $227.0 million of outstanding consolidated principal indebtedness. The following table sets forth information as of June 30, 2023 with respect to our outstanding indebtedness (in thousands):

	Outstanding Balance as of June 30, 2023		Interest Rate at June 30, 2023		Maturity Date
Revolving Credit Facility(1)	$	29,000	SOFR+148 bps(2)		January 2026
2021 Term Loan(1)	50,000		SOFR+143 bps(2)		January 2027
2022 Term Loan (1)	115,000		SOFR+143 bps(2)		February 2028
Secured Borrowings:
Vision Bank(3)	1,409		3.69	%	September 2041
First Oklahoma Bank(4)	324		3.63	%	December 2037
Vision Bank – 2018(5)	844		3.69	%	September 2041
Seller Financing(6)	194		6.00	%	January 2025
AIG (7)	30,225		2.80	%	January 2031
Total Principal	$	226,996

Explanatory Notes:

(1)See above under "—Revolving Credit Facility and Term loans" for details regarding the Credit Facilities. During the three and six months ended June 30, 2023, we incurred $0.07 million and $0.1 million, respectively, of unused facility fees related to the Revolving Credit Facility.

(2)Based upon the one-month Adjusted Term SOFR, which is SOFR plus a term SOFR adjustment of 0.10%, subject to a 0% floor (the “Adjusted Term SOFR”). Upon our achievement of certain sustainability targets for 2022, the applicable margins for the Credit Facilities were reduced by 0.02% for the year ending December 31, 2023, which is reflected in the margins noted in the table above.

(3)Five properties are collateralized under this loan and Mr. Spodek also provided a personal guarantee of payment for 50% of the outstanding amount thereunder. The loan has a fixed interest rate of 3.69% for the first five years with interest payments only (ending in October 2026), then adjusting every subsequent five year period thereafter with principal and interest payments to the rate based on the five year weekly average yield on United States Treasury securities adjusted to a constant maturity of five years, as made available to the Board of Governors of the Federal Reserve System (the "Five-Year Treasury Rate"), plus a margin of 2.75%, with a minimum annual rate of 2.75%.

(4)The loan is collateralized by first mortgage liens on four properties and a personal guarantee of payment by Mr. Spodek. The loan has a fixed interest rate of 3.625% for the first five years (ending in August 2026), then adjusting annually thereafter to a variable annual rate of Wall Street Journal Prime Rate with a minimum annual rate of 3.625%.

(5)The loan is collateralized by first mortgage liens on one property and a personal guarantee of payment by Mr. Spodek. The loan has a fixed interest rate of 3.69% for the first five years with interest payments only (ending in October 2026), then adjusting every subsequent five year period thereafter with principal and interest payments to the rate based on the Five-Year Treasury Rate, plus a margin of 2.75%, with a minimum annual rate of 2.75%.

(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 $0.1 million with the first installment due on January 2, 2021 based on a 6.0% interest rate per annum through January 2, 2025.

(7)The loan is secured by a first mortgage lien on an industrial property located in Warrendale, Pennsylvania. The loan has a fixed interest rate of 2.80% with interest-only payments for the first five years and fixed payments of principal and interest thereafter based on a 30-year amortization schedule.

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Secured Borrowings as of June 30, 2023

As of June 30, 2023, we had approximately $33.0 million of secured borrowings outstanding, all of which are currently fixed-rate debt with a weighted average interest rate of 2.89% per annum.

Dividends

To 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, 2023, we paid cash dividends of $0.2375 and $0.475 per share, respectively. Our Board of Directors approved, and on July 26, 2023, we declared a second quarter common stock dividend of $0.2375 per share, which will be paid on August 31, 2023 to stockholders of record as of August 7, 2023.

Inflation

Because most of our leases provide for fixed annual rental payments without annual rent escalations, our rental revenues are 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.

Subsequent Real Estate Acquisitions

As of August 7, 2023 and during the period subsequent to June 30, 2023, we have acquired 15 properties in individual or portfolio transactions for an aggregate of approximately $6.2 million, excluding closing costs.

Critical Accounting Estimates

Refer to the heading titled “Critical Accounting Estimates” under Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2022 for a discussion of our critical accounting estimates.

Recently Adopted Accounting Pronouncements

For a discussion of our adoption of new accounting pronouncements, please see Note 2. Summary of Significant Accounting Policies in the Notes to our unaudited Consolidated Financial Statements included under Item 1 herein.

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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Market risk is the risk of loss from adverse changes in market prices and interest rates. Our future earnings, cash flows and fair values relevant to financial instruments are dependent upon prevailing market interest rates. Our primary market risk results from our indebtedness, which bears interest at both fixed and variable rates. As of June 30, 2023, our indebtedness was approximately $227.0 million, consisting of approximately $194.0 million of variable-rate debt and approximately $33.0 million of fixed-rate debt. Of the $194.0 million variable-rate debt, $50.0 million related to the 2021 Term Loan and $115.0 million related to the 2022 Term Loan as of June 30, 2023, which had been fixed through the Interest Rate Swaps. When factoring in the Term Loans as fixed-rate debt through the Interest Rate Swaps, as of June 30, 2023, approximately $29.0 million of our indebtedness was variable-rate debt and approximately $198.0 million was fixed-rate debt. Assuming no increase in the amount of our outstanding variable-rate indebtedness, if the one-month Adjusted Term SOFR were to increase or decrease by 1.0%, our cash flows would decrease or increase by approximately $0.3 million on an annualized basis.

Subject to maintaining our status as a REIT for federal income tax purposes, we manage our market risk on variable rate debt through the use of interest rate swaps that fix the rate on all or a portion of our variable rate debt for varying periods up to maturity, such as the Interest Rate Swaps. In the future, we may use other 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. 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.

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 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 Chief Financial Officer (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 Principal Financial Officer, as appropriate to allow for timely decisions regarding required disclosure.

Changes in Internal Control over Financial Reporting

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

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PART II. OTHER INFORMATION

Item 1. Legal Proceedings

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

Item 1A. Risk Factors

There have been no material changes from the risk factors disclosed in the section entitled “Risk Factors” under Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2022.

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

Rule 10b5-1 Purchase Plan

On May 11, 2023, an affiliate of Andrew Spodek, our chief executive officer, entered into a pre-arranged trading plan (the “10b5-1 plan”) that is intended to satisfy the affirmative defense of Rule 10b5-1(c) under the Exchange Act. Under the 10b5-1 plan, the affiliate of Mr. Spodek can purchase up to 100,000 shares of our Class A common stock between August 14, 2023 and August 13, 2024, subject to price and trading limitations under the plan.

Amended and Restated Bylaws

On August 4, 2023, our Board of Directors (the “Board”) amended and restated our Amended and Restated Bylaws (as so amended and restated, the “Amended and Restated Bylaws”), effective as of such date, to, among other things, implement a proxy access framework.

Implementation of Proxy Access

Section 14 of Article II of the Amended and Restated Bylaws has been added to permit a stockholder, or a group of up to 20 stockholders, to nominate and include director candidates constituting up to the lesser of two or 20% of the number of directors up for election at any annual meeting of stockholders, provided that (i) such stockholder or stockholder group, as applicable, owns 3% or more of the Company’s outstanding common stock continuously for at least three years, and (ii) such stockholder or stockholder group, as applicable, and the nominee(s) satisfy certain procedural, eligibility and disclosure requirements set forth in Article II, Section 14 of the Amended and Restated Bylaws.

Additional Bylaw Amendments Relating to Director Nominations and the Proposal of Other Business

In addition to the Board's implementation of proxy access, the Amended and Restated Bylaws were also updated to reflect certain procedural requirements related to the SEC’s recently adopted “universal proxy” rules and to more fully develop the process and information required to be disclosed by a stockholder nominating an individual for election to the Board or making a proposal of other business.

General

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In addition to the amendments described above, the Amended and Restated Bylaws include certain changes to (1) clarify language, (2) comply with or conform to Maryland law and (3) make various technical corrections and ministerial changes.

The foregoing summary description of the Amended and Restated Bylaws does not purport to be complete and is qualified in its entirety by reference to the complete text of the Amended and Restated Bylaws, a copy of which is included as Exhibit 3.1 to this report and is incorporated herein by reference.

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Item 6. Exhibits

Exhibit	Exhibit Description
3.1	Amended and Restated Bylaws of the Company, effective as of August 4, 2023.*
31.1	Certification of Chief Executive Officer pursuant to Rule 13a-14(a)/15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.*
31.2	Certification of Chief Financial Officer pursuant to Rule 13a-14(a)/15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.*
32.1	Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.*
32.2	Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted 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**
104	Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

*    Exhibits filed with this report.

**    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; (ii) Consolidated Statements of Operations and Comprehensive Income; (iii) Consolidated Statements of Changes in Equity; (iv) Consolidated Statements of Cash Flows; and (v) Notes to Consolidated Financial Statements.

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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 8, 2023	By:	/s/ Andrew Spodek
		Andrew Spodek
		Chief Executive Officer
		(Principal Executive Officer)
Date: August 8, 2023	By:	/s/ Robert B. Klein
		Robert B. Klein
		Chief Financial Officer
		(Principal Financial Officer)

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EX-3.1

Exhibit 3.1

POSTAL REALTY TRUST, INC.

BYLAWS

ARTICLE I

OFFICES

    Section 1.    PRINCIPAL OFFICE. The principal office of Postal Realty Trust, Inc. (the “Corporation”) in the State of Maryland shall be located at such place as the Board of Directors may designate.

    Section 2.    ADDITIONAL OFFICES. The Corporation may have additional offices, including a principal executive office, at such places as the Board of Directors may from time to time determine or the business of the Corporation may require.

ARTICLE II

MEETINGS OF STOCKHOLDERS

    Section 1.    PLACE. All meetings of stockholders shall be held at the principal executive office of the Corporation or at such other place as shall be set in accordance with these Bylaws and stated in the notice of the meeting. The Board of Directors is authorized to determine that a meeting not be held at any place, but instead may be held partially or solely by means of remote communication. In accordance with these Bylaws and subject to any guidelines and procedures adopted by the Board of Directors, stockholders and proxy holders may participate in any meeting of stockholders held by means of remote communication and may vote at such meeting as permitted by Maryland law. Participation in a meeting by these means constitutes presence in person at the meeting.

    Section 2.    ANNUAL MEETING. An annual meeting of stockholders for the election of directors and the transaction of any business within the powers of the Corporation shall be held on the date and at the time and place set by the Board of Directors.

    Section 3.    SPECIAL MEETINGS.

    (a)    General. Each of the chair of the board, chief executive officer, president and Board of Directors may call a special meeting of stockholders. Except as provided in subsection (b)(4) of this Section 3, a special meeting of stockholders shall be held on the date and at the time and place set by the chair of the board, chief executive officer, president or Board of Directors, whoever has called the meeting. Subject to subsection (b) of this Section 3, a special meeting of stockholders shall also be called by the secretary of the Corporation to act on any matter that may properly be considered at a meeting of stockholders upon the written request of stockholders entitled to cast not less than a majority of all the votes entitled to be cast on such matter at such meeting (the “Special Meeting Percentage”).

    (b)    Stockholder-Requested Special Meetings. (1) Any stockholder of record seeking to have stockholders request a special meeting shall, by sending written notice to the secretary (the “Record Date Request Notice”) by registered mail, return receipt requested, request the Board of Directors to fix a record date to determine the stockholders entitled to request a special meeting (the “Request Record Date”). The Record Date Request Notice shall set forth the purpose of the meeting and the matters proposed to be acted on at it, shall be signed by one or more stockholders

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of record as of the date of signature (or their agents duly authorized in a writing accompanying the Record Date Request Notice), shall bear the date of signature of each such stockholder (or such agent) and shall set forth all information relating to each such stockholder and each matter proposed to be acted on at the meeting that would be required to be disclosed in connection with the solicitation of proxies for the election of directors in an election contest (even if an election contest is not involved), or would otherwise be required in connection with such a solicitation, in each case pursuant to Regulation 14A (or any successor provision) under the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder (the “Exchange Act”). Upon receiving the Record Date Request Notice, the Board of Directors may fix a Request Record Date. The Request Record Date shall not precede and shall not be more than ten days after the close of business on the date on which the resolution fixing the Request Record Date is adopted by the Board of Directors. If the Board of Directors, within ten days after the date on which a valid Record Date Request Notice is received, fails to adopt a resolution fixing the Request Record Date, the Request Record Date shall be the close of business on the tenth day after the first date on which a Record Date Request Notice is received by the secretary.

        (2)    In order for any stockholder to request a special meeting to act on any matter that may properly be considered at a meeting of stockholders, one or more written requests for a special meeting (collectively, the “Special Meeting Request”) signed by stockholders of record (or their agents duly authorized in a writing accompanying the request) as of the Request Record Date entitled to cast not less than the Special Meeting Percentage shall be delivered to the secretary. In addition, the Special Meeting Request shall (i) set forth the purpose of the meeting and the matters proposed to be acted on at it (which shall be limited to those lawful matters set forth in the Record Date Request Notice received by the secretary), (ii) bear the date of signature of each such stockholder (or such agent) signing the Special Meeting Request, (iii) set forth (A) the name and address, as they appear in the Corporation’s books, of each stockholder signing such request (or on whose behalf the Special Meeting Request is signed), (B) the class, series and number of all shares of stock of the Corporation which are owned (beneficially or of record) by each such stockholder and (C) the nominee holder for, and number of, shares of stock of the Corporation owned beneficially but not of record by such stockholder, (iv) be sent to the secretary by registered mail, return receipt requested, and (v) be received by the secretary within 60 days after the Request Record Date. Any requesting stockholder (or agent duly authorized in a writing accompanying the revocation of the Special Meeting Request) may revoke such stockholder’s request for a special meeting at any time by written revocation delivered to the secretary.

        (3)    The secretary shall inform the requesting stockholders of the reasonably estimated cost of preparing and mailing or delivering the notice of the meeting (including the Corporation’s proxy materials). The secretary shall not be required to call a special meeting upon stockholder request and such meeting shall not be held unless, in addition to the documents required by paragraph (2) of this Section 3(b), the secretary receives payment of such reasonably estimated cost prior to the preparation and mailing or delivery of such notice of the meeting.

        (4)    In the case of any special meeting called by the secretary upon the request of stockholders (a “Stockholder-Requested Meeting”), such meeting shall be held at such place, date and time as may be designated by the Board of Directors; provided, however, that the date of any Stockholder-Requested Meeting shall be not more than 90 days after the record date for such meeting (the “Meeting Record Date”); and provided further that if the Board of Directors fails to designate, within ten days after the date that a valid Special Meeting Request is actually received by the secretary (the “Delivery Date”), a date and time for a Stockholder-Requested Meeting, then such meeting shall be held at 2:00 p.m., local time, on the 90th day after the Meeting Record Date or, if such 90th day is not a Business Day (as defined below), on the first preceding Business Day; and provided further that in the event that the Board of Directors fails to designate a place for a Stockholder-Requested Meeting within ten days after the Delivery Date, then such meeting shall be held at the principal executive office of the Corporation. In fixing a date for a Stockholder-Requested

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Meeting, the Board of Directors may consider such factors as it deems relevant, including, without limitation, the nature of the matters to be considered, the facts and circumstances surrounding any request for the meeting and any plan of the Board of Directors to call an annual meeting or a special meeting. In the case of any Stockholder-Requested Meeting, if the Board of Directors fails to fix a Meeting Record Date that is a date within 30 days after the Delivery Date, then the close of business on the 30th day after the Delivery Date shall be the Meeting Record Date. The Board of Directors may revoke the notice for any Stockholder-Requested Meeting in the event that the requesting stockholders fail to comply with the provisions of paragraph (3) of this Section 3(b).

        (5)    If written revocations of the Special Meeting Request have been delivered to the secretary and the result is that stockholders of record (or their agents duly authorized in writing), as of the Request Record Date, entitled to cast less than the Special Meeting Percentage have delivered, and not revoked, requests for a special meeting on the matter to the secretary: (i) if the notice of meeting has not already been delivered, the secretary shall refrain from delivering the notice of the meeting and send to all requesting stockholders who have not revoked such requests written notice of any revocation of a request for a special meeting on the matter, or (ii) if the notice of meeting has been delivered and if the secretary first sends to all requesting stockholders who have not revoked requests for a special meeting on the matter written notice of any revocation of a request for the special meeting and written notice of the Corporation’s intention to revoke the notice of the meeting or for the chair of the meeting to adjourn the meeting without action on the matter, (A) the secretary may revoke the notice of the meeting at any time before ten days before the commencement of the meeting or (B) the chair of the meeting may call the meeting to order and adjourn the meeting from time to time without acting on the matter. Any request for a special meeting received after a revocation by the secretary of a notice of a meeting shall be considered a request for a new special meeting.

        (6)    The chair of the board, chief executive officer, president or Board of Directors may appoint regionally or nationally recognized independent inspectors of elections to act as the agent of the Corporation for the purpose of promptly performing a ministerial review of the validity of any purported Special Meeting Request received by the secretary. For the purpose of permitting the inspectors to perform such review, no such purported Special Meeting Request shall be deemed to have been received by the secretary until the earlier of (i) five Business Days after actual receipt by the secretary of such purported request and (ii) such date as the independent inspectors certify to the Corporation that the valid requests received by the secretary represent, as of the Request Record Date, stockholders of record entitled to cast not less than the Special Meeting Percentage. Nothing contained in this paragraph (6) shall in any way be construed to suggest or imply that the Corporation or any stockholder shall not be entitled to contest the validity of any request, whether during or after such five Business Day period, or to take any other action (including, without limitation, the commencement, prosecution or defense of any litigation with respect thereto, and the seeking of injunctive relief in such litigation).

        (7)    For purposes of these Bylaws, “Business Day” shall mean any day other than a Saturday, a Sunday or a day on which banking institutions in the State of New York are authorized or obligated by law or executive order to close.

    Section 4.    NOTICE. Not less than ten nor more than 90 days before each meeting of stockholders, the secretary shall give to each stockholder entitled to vote at such meeting and to each stockholder not entitled to vote who is entitled to notice of the meeting notice in writing or by electronic transmission stating the time and place of the meeting and, in the case of a special meeting or as otherwise may be required by any statute, the purpose for which the meeting is called, by mail, by presenting it to such stockholder personally, by leaving it at the stockholder’s residence or usual place of business, by electronic transmission or by any other means permitted by Maryland law. If mailed, such notice shall be deemed to be given when deposited in the United States mail addressed to the stockholder at the stockholder’s address as it appears on the records of the Corporation, with

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postage thereon prepaid. If transmitted electronically, such notice shall be deemed to be given when transmitted to the stockholder by an electronic transmission to any address or number of the stockholder at which the stockholder receives electronic transmissions. The Corporation may give a single notice to all stockholders who share an address, which single notice shall be effective as to any stockholder at such address, unless such stockholder objects to receiving such single notice or revokes a prior consent to receiving such single notice. Failure to give notice of any meeting to one or more stockholders, or any irregularity in such notice, shall not affect the validity of any meeting fixed in accordance with this Article II or the validity of any proceedings at any such meeting.

    Subject to Section 11(a) of this Article II, any business of the Corporation may be transacted at an annual meeting of stockholders without being specifically designated in the notice, except such business as is required by any statute to be stated in such notice. No business shall be transacted at a special meeting of stockholders except as specifically designated in the notice. The Corporation may postpone or cancel a meeting of stockholders by making a public announcement (as defined in Section 11(c)(4) of this Article II) of such postponement or cancellation prior to the meeting. Notice of the date, time and place to which the meeting is postponed shall be given not less than ten days prior to such date and otherwise in the manner set forth in this section.

    Section 5.    ORGANIZATION AND CONDUCT. Every meeting of stockholders shall be conducted by an individual appointed by the Board of Directors to be chair of the meeting or, in the absence of such appointment or appointed individual, by the chair of the board or, in the case of a vacancy in the office or absence of the chair of the board, by one of the following individuals present at the meeting in the following order: the vice chair of the board, if there is one, the chief executive officer, the president, the vice presidents in their order of rank and, within each rank, in their order of seniority, the secretary, or, in the absence of such officers, a chair chosen by the stockholders by the vote of a majority of the votes cast by stockholders present in person or by proxy. The secretary or, in the case of a vacancy in the office or absence of the secretary, an assistant secretary or an individual appointed by the Board of Directors or the chair of the meeting shall act as secretary. In the event that the secretary presides at a meeting of stockholders, an assistant secretary, or, in the absence of all assistant secretaries, an individual appointed by the Board of Directors or the chair of the meeting, shall record the minutes of the meeting. Even if present at the meeting, the person holding the office named herein may delegate to another person the power to act as chair or secretary of the meeting. The order of business and all other matters of procedure at any meeting of stockholders shall be determined by the chair of the meeting. The chair of the meeting may prescribe such rules, regulations and procedures and take such action as, in the discretion of the chair and without any action by the stockholders, are appropriate for the proper conduct of the meeting, including, without limitation, (a) restricting admission to the time set for the commencement of the meeting; (b) limiting attendance or participation at the meeting to stockholders of record of the Corporation, their duly authorized proxies and such other individuals as the chair of the meeting may determine; (c) recognizing speakers at the meeting and determining when and for how long speakers and any individual speaker may address the meeting; (d) determining when and for how long the polls should be opened and when the polls should be closed and when announcement of the results should be made; (e) maintaining order and security at the meeting; (f) removing any stockholder or any other individual who refuses to comply with meeting procedures, rules or guidelines as set forth by the chair of the meeting; (g) concluding a meeting or recessing or adjourning the meeting, whether or not a quorum is present, to a later date and time and at a place either (i) announced at the meeting or (ii) provided at a future time through means announced at the meeting; and (h) complying with any state and local laws and regulations concerning safety and security. Unless otherwise determined by the chair of the meeting, meetings of stockholders shall not be required to be held in accordance with any rules of parliamentary procedure.

    Section 6.    QUORUM. At any meeting of stockholders, the presence in person or by proxy of stockholders entitled to cast a majority of all the votes entitled to be cast at such meeting on any matter shall constitute a quorum; but this section shall not affect any requirement under any

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statute or the charter of the Corporation (the “Charter”) for the vote necessary for the approval of any matter. If such quorum is not established at any meeting of the stockholders, the chair of the meeting may adjourn the meeting from time to time to a date not more than 120 days after the original record date without notice other than announcement at the meeting. The date, time and place of the meeting, as reconvened, shall be either (a) announced at the meeting or (b) provided at a future time through means announced at the meeting.

    The stockholders present either in person or by proxy, at a meeting which has been duly called and at which a quorum has been established, may continue to transact business until adjournment, notwithstanding the withdrawal from the meeting of enough stockholders to leave fewer than would be required to establish a quorum.

    Section 7.    VOTING. A plurality of all the votes cast at a meeting of stockholders duly called and at which a quorum is present shall be sufficient to elect a director.Each share entitles the holder thereof to vote for as many individuals as there are directors to be elected and for whose election the holder is entitled to vote. A majority of the votes cast at a meeting of stockholders duly called and at which a quorum is present shall be sufficient to approve any other matter which may properly come before the meeting, unless more than a majority of the votes cast is required by statute or by the Charter or these Bylaws. Unless otherwise provided by statute or by the Charter, each outstanding share of stock, regardless of class, entitles the holder thereof to cast one vote on each matter submitted to a vote at a meeting of stockholders. Voting on any question or in any election may be viva voce unless the chair of the meeting shall order that voting be by ballot or otherwise.

    Section 8.    PROXIES. A holder of record of shares of stock of the Corporation may cast votes in person or by proxy that is (a) executed by the stockholder or by the stockholder’s duly authorized agent in any manner permitted by applicable law, (b) compliant with Maryland law and these Bylaws and (c) filed in accordance with the procedures established by the Corporation. Such proxy or evidence of authorization of such proxy shall be filed with the record of the proceedings of the meeting. No proxy shall be valid more than eleven months after its date unless otherwise provided in the proxy.

    Any stockholder directly or indirectly soliciting proxies from other stockholders must use a proxy card color other than white, which shall be reserved for the exclusive use by the Board of Directors.

    Section 9.    VOTING OF STOCK BY CERTAIN HOLDERS. Stock of the Corporation registered in the name of a corporation, limited liability company, partnership, joint venture, trust or other entity, if entitled to be voted, may be voted by the president or a vice president, managing member, manager, general partner or trustee thereof, as the case may be, or a proxy appointed by any of the foregoing individuals, unless some other person who has been appointed to vote such stock pursuant to a bylaw or a resolution of the governing body of such corporation or other entity or agreement of the partners of a partnership presents a certified copy of such bylaw, resolution or agreement, in which case such person may vote such stock. Any trustee or fiduciary, in such capacity, may vote stock registered in such trustee’s or fiduciary’s name, either in person or by proxy.

    Shares of stock of the Corporation directly or indirectly owned by it shall not be voted at any meeting and shall not be counted in determining the total number of outstanding shares entitled to be voted at any given time, unless they are held by it in a fiduciary capacity, in which case they may be voted and shall be counted in determining the total number of outstanding shares at any given time.

    The Board of Directors may adopt by resolution a procedure by which a stockholder may certify in writing to the Corporation that any shares of stock registered in the name of the

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stockholder are held for the account of a specified person other than the stockholder. The resolution shall set forth the class of stockholders who may make the certification, the purpose for which the certification may be made, the form of certification and the information to be contained in it; if the certification is with respect to a record date, the time after the record date within which the certification must be received by the Corporation; and any other provisions with respect to the procedure which the Board of Directors considers necessary or appropriate. On receipt by the secretary of the Corporation of such certification, the person specified in the certification shall be regarded as, for the purposes set forth in the certification, the holder of record of the specified stock in place of the stockholder who makes the certification.

    Section 10.    INSPECTORS. The Board of Directors or the chair of the meeting may appoint, before or at the meeting, one or more inspectors for the meeting and any successor to the inspector. Except as otherwise provided by the chair of the meeting, the inspectors, if any, shall (a) determine the number of shares of stock represented at the meeting, in person or by proxy, and the validity and effect of proxies, (b) receive and tabulate all votes, ballots or consents, (c) report such tabulation to the chair of the meeting, (d) hear and determine all challenges and questions arising in connection with the right to vote, and (e) do such acts as are proper to fairly conduct the election or vote. Each such report shall be in writing and signed by the inspector or by a majority of them if there is more than one inspector acting at such meeting. If there is more than one inspector, the report of a majority shall be the report of the inspectors. The report of the inspector or inspectors on the number of shares represented at the meeting and the results of the voting shall be prima facie evidence thereof.

    Section 11. ADVANCE NOTICE OF STOCKHOLDER NOMINEES FOR DIRECTOR AND OTHER STOCKHOLDER PROPOSALS.

    (a)    Annual Meetings of Stockholders. (1) Nominations of individuals for election to the Board of Directors and the proposal of other business to be considered by the stockholders may be made at an annual meeting of stockholders (i) pursuant to the Corporation’s notice of meeting, (ii) by or at the direction of the Board of Directors or (iii) by any stockholder of the Corporation who was a stockholder of record at the record date set by the Board of Directors for the purpose of determining stockholders entitled to vote at the annual meeting, at the time of giving of notice by the stockholder as provided for in this Section 11(a) and at the time of the annual meeting (and any postponement or adjournment thereof), who is entitled to vote at the meeting in the election of each individual so nominated or on any such other business and who has complied with this Section 11(a) and, as applicable, with Section 14 of this Article II with respect to qualifying nominations of a Stockholder Nominee pursuant to a Notice of Proxy Access Nomination (each as defined below).

        (2)    For any nomination or other business to be properly brought before an annual meeting by a stockholder pursuant to clause (iii) of paragraph (a)(1) of this Section 11, the stockholder must have given timely notice thereof in writing to the secretary of the Corporation and any such other business must otherwise be a proper matter for action by the stockholders. To be timely, a stockholder’s notice shall set forth all information and certifications required under this Section 11 and shall be delivered to the secretary at the principal executive office of the Corporation not earlier than the 150th day nor later than 5:00 p.m., Eastern Time, on the 120th day prior to the first anniversary of the date of the proxy statement (as defined in Section 11(c)(4) of this Article II) for the preceding year’s annual meeting; provided, however, that in the event that the date of the annual meeting is advanced or delayed by more than 30 days from the first anniversary of the date of the preceding year’s annual meeting, in order for notice by the stockholder to be timely, such notice must be so delivered not earlier than the 150th day prior to the date of such annual meeting and not later than 5:00 p.m., Eastern Time, on the later of the 120th day prior to the date of such annual meeting, as originally convened, or the tenth day following the day on which public announcement of the date of such meeting is first made. The public announcement of a postponement or adjournment of an

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annual meeting shall not commence a new time period for the giving of a stockholder’s notice as described above.

        (3)    Such stockholder’s notice shall set forth:

            (i)    as to each individual whom the stockholder proposes to nominate for election or reelection as a director (each, a “Proposed Nominee”), all information relating to the Proposed Nominee that would be required to be disclosed in connection with the solicitation of proxies for the election of the Proposed Nominee as a director in an election contest (even if an election contest is not involved), or would otherwise be required in connection with such solicitation, in each case pursuant to Regulation 14A (or any successor provision) under the Exchange Act;

            (ii)    as to any other business that the stockholder proposes to bring before the meeting, (A) a description of such business (including the text of any proposal), the stockholder’s reasons for proposing such business at the meeting and any material interest in such business of such stockholder or any Stockholder Associated Person (as defined below), individually or in the aggregate, including any anticipated benefit to the stockholder or the Stockholder Associated Person therefrom and (B) any other information relating to such item of business that would be required to be disclosed in a proxy statement or other filing required to be made in connection with solicitations of proxies in support of the business proposed to be brought before the meeting pursuant to Regulation 14A (or any successor provision) of the Exchange Act;

            (iii)    as to the stockholder giving the notice, any Proposed Nominee and any Stockholder Associated Person,

                (A)    the class, series and number of all shares of stock or other securities of the Corporation or any affiliate thereof (collectively, the “Company Securities”), if any, which are owned (beneficially or of record) by such stockholder, Proposed Nominee or Stockholder Associated Person, the date on which each such Company Security was acquired and the investment intent of such acquisition, and any short interest (including any opportunity to profit or share in any benefit from any decrease in the price of such stock or other security) in any Company Securities of any such person,

                (B)    the nominee holder for, and number of, any Company Securities owned beneficially but not of record by such stockholder, Proposed Nominee or Stockholder Associated Person,

                (C)    whether and the extent to which such stockholder, Proposed Nominee or Stockholder Associated Person, directly or indirectly (through brokers, nominees or otherwise), is subject to or during the last six months has engaged in any hedging, derivative or other transaction or series of transactions or entered into any other agreement, arrangement or understanding (including any short interest, any borrowing or lending of securities or any proxy or voting agreement), the effect or intent of which is to (I) manage risk or benefit of changes in the price of Company Securities for such stockholder, Proposed Nominee or Stockholder Associated Person or (II) increase or decrease the voting power of such stockholder, Proposed Nominee or Stockholder Associated Person in the Corporationor any affiliate thereofdisproportionately to such person’s economic interest in the Company Securitiesand

                (D)    any substantial interest, direct or indirect (including, without limitation, any existing or prospective commercial, business or contractual relationship with the Corporation), by security holdings or otherwise, of such stockholder, Proposed Nominee or Stockholder Associated Person, in the Corporation or any affiliate thereof, other than an interest arising from the ownership of Company Securities where such stockholder, Proposed Nominee or

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Stockholder Associated Person receives no extra or special benefit not shared on a pro rata basis by all other holders of the same class or series;

            (iv)    as to the stockholder giving the notice, any Stockholder Associated Person with an interest or ownership referred to in clauses (ii) or (iii) of this paragraph (3) of this Section 11(a) and any Proposed Nominee,

                (A)    the name and address of such stockholder, as they appear on the Corporation’s stock ledger, and the current nameand business address, if different, of each such Stockholder Associated Person and any Proposed Nominee, and

                (B)    the investment strategy or objective, if any, of such stockholder and each such Stockholder Associated Person who is not an individual and a copy of the prospectus, offering memorandum or similar document, if any, provided to investors or potential investors in such stockholder and each such Stockholder Associated Person;

            (v)    the name and address of any person who contacted or was contacted by the stockholder giving the notice or any Stockholder Associated Person about the Proposed Nominee or other business proposal;

            (vi)    to the extent known by the stockholder giving the notice, the name and address of any other person supporting the nominee for election or reelection as a director or the proposal of other business;

            (vii)     if the stockholder is proposing one or more Proposed Nominees, a representation that such stockholder, Proposed Nominee or Stockholder Associated Person intends or is part of a group which intends to solicit the holders of shares representing at least 67% of the voting power of shares entitled to vote on the election of directors in support of Proposed Nominees in accordance with Rule 14a-19 of the Exchange Act; and

            (viii)     all other information regarding the stockholder giving the notice and each Stockholder Associated Person that would be required to be disclosed by the stockholder in connection with the solicitation of proxies for the election of directors in an election contest (even if an election contest is not involved), or would otherwise be required in connection with such a solicitation, in each case pursuant to Regulation 14A (or any successor provision) under the Exchange Act.

        (4)    Such stockholder’s notice shall, with respect to any Proposed Nominee, be accompanied by a:

            (i) written undertaking executed by the Proposed Nominee:

                (A) that such Proposed Nominee (I) is not, and will not become, a party to any agreement, arrangement or understanding with any person or entity other than the Corporation in connection with service or action as a director that has not been disclosed to the Corporation, (II) will serve as a director of the Corporation if elected and will notify the Corporation simultaneously with the notification to the stockholder of the Proposed Nominee’s actual or potential unwillingness or inability to serve as a director and (III) does not need any permission or consent from any third party to serve as a director of the Corporation, if elected, that has not been obtained, including any employer or any other board or governing body on which such Proposed Nominee serves;

                (B) attaching copies of any and all requisite permissions or consents; and

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                (C) attaching a completed Proposed Nominee questionnaire (which questionnaire shall be provided by the Corporation, upon request, to the stockholder providing the notice and shall include all information relating to the Proposed Nominee that would be required to be disclosed in connection with the solicitation of proxies for the election of the Proposed Nominee as a director in an election contest (even if an election contest is not involved), or would otherwise be required in connection with such solicitation, in each case pursuant to Regulation 14A (or any successor provision) under the Exchange Act, or would be required pursuant to the rules of any national securities exchange on which any securities of the Corporation are listed or over-the-counter market on which any securities of the Corporation are traded); and

            (ii) certificate executed by the stockholder certifying that such stockholder will:

                (A) comply with Rule 14a-19 promulgated under the Exchange Act in connection with such stockholder’s solicitation of proxies in support of any Proposed Nominee;

                (B) notify the Corporation as promptly as practicable of any determination by the stockholder to no longer solicit proxies for the election of any Proposed Nominee as a director at the annual meeting;

                (C) furnish such other or additional information as the Corporation may request for the purpose of determining whether the requirements of this Section 11 have been complied with and of evaluating any nomination or other business described in the stockholder’s notice; and

                (D) appear in person or by proxy at the meeting to nominate any Proposed Nominees to bring such business before the meeting, as applicable, and acknowledges that if the stockholder does not so appear in person or by proxy at the meeting to nominate such Proposed Nominees or bring such business before the meeting, as applicable, the Corporation need not bring such Proposed Nominee or such business for a vote at such meeting and any proxies or votes cast in favor of the election of any such Proposed Nominee or of any proposal related to such other business need not be counted or considered.

        (5)    Notwithstanding anything in this subsection (a) of this Section 11 to the contrary, in the event that the number of directors to be elected to the Board of Directors is increased, and there is no public announcement of such action at least 130 days prior to the first anniversary of the date of the proxy statement (as defined in Section 11(c)(4) of this Article II) for the preceding year’s annual meeting, a stockholder’s notice required by clause (iii) of paragraph (a)(1) of this Section 11 shall also be considered timely, but only with respect to nominees for any new positions created by such increase, if it shall be delivered to the secretary at the principal executive office of the Corporation not later than 5:00 p.m., Eastern Time, on the tenth day following the day on which such public announcement is first made by the Corporation.

        (6)    For purposes of this Section 11, “Stockholder Associated Person” of any stockholder shall mean (i) any person acting in concert with such stockholder or another Stockholder Associated Person or who is otherwise a participant (as defined in Instruction 3 to Item 4 of Schedule 14A under the Exchange Act) in the solicitation, (ii) any beneficial owner of shares of stock of the Corporation owned of record or beneficially by such stockholder (other than a stockholder that is a depositary) and (iii) any person that directly, or indirectly through one or more intermediaries, controls, or is controlled by, or is under common control with, such stockholder or such Stockholder Associated Person.

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    (b)    Special Meetings of Stockholders. Only such business shall be conducted at a special meeting of stockholders as shall have been brought before the meeting pursuant to the Corporation’s notice of meeting and, except as contemplated by and in accordance with the next two sentences of this Section 11(b), no stockholder may nominate an individual for election to the Board of Directors or make a proposal of other business to be considered at a special meeting. Nominations of individuals for election to the Board of Directors may be made at a special meeting of stockholders at which directors are to be elected only (1) by or at the direction of the Board of Directors or (2)provided that the special meeting has been called in accordance with Section 3(a) of this Article II for the purpose of electing directors, by any stockholder of the Corporation who is a stockholder of record at the record date set by the Board of Directors for the purpose of determining stockholders entitled to vote at the special meeting, at the time of giving of notice provided for in this Section 11 and at the time of the special meeting (and any postponement or adjournment thereof), who is entitled to vote at the meeting in the election of each individual so nominated and who has complied with the notice procedures set forth in this Section 11. In the event the Corporation calls a special meeting of stockholders for the purpose of electing one or more individuals to the Board of Directors, any stockholder may nominate an individual or individuals (as the case may be) for election as a director as specified in the Corporation’s notice of meeting, if the stockholder’s notice, containing the information and certifications required by paragraphs (a)(3) and (4) of this Section 11, is delivered to the secretary at the principal executive office of the Corporation not earlier than the 120th day prior to such special meeting and not later than 5:00 p.m., Eastern Time, on the later of the 90th day prior to such special meeting or the tenth day following the day on which public announcement is first made of the date of the special meeting. The public announcement of a postponement or adjournment of a special meeting shall not commence a new time period for the giving of a stockholder’s notice as described above.

    (c)    General. (1) If any information or certification submitted pursuant to this Section 11 or Section 14 of this Article II by any stockholder proposing a nominee for election as a director or any proposal for other business at a meeting of stockholders, including any certification from a Proposed Nominee, shall be inaccurate in any material respect, such information or certification may be deemed not to have been provided in accordance with this Section 11. Any such stockholder shall notify the Corporation of any inaccuracy or change (within two Business Days of becoming aware of such inaccuracy or change) in any such information or certification. Upon written request by the secretary or the Board of Directors, any such stockholder or Proposed Nominee shall provide, within five Business Days of delivery of such request (or such other period as may be specified in such request), (i) written verification, satisfactory, in the discretion of the Board of Directors or any authorized officer of the Corporation, to demonstrate the accuracy of any information submitted by the stockholder pursuant to this Section 11 or Section 14 of this Article II, (ii) a written update of any information (including, if requested by the Corporation, written confirmation by such stockholder that it continues to intend to bring such nomination or other business proposal before the meeting and, if applicable, satisfy the requirements of Rule 14a-19(a)(3)) submitted by the stockholder pursuant to this Section 11 or Section 14 of this Article II as of an earlier date and (iii) an updated certification by each Proposed Nominee that such individual will serve as a director of the Corporation if elected. If a stockholder or Proposed Nominee fails to provide such written verification, update or certification within such period, the information as to which such written verification, update or certification was requested may be deemed not to have been provided in accordance with this Section 11 or Section 14 of this Article II.

        (2)    Only such individuals who are nominated in accordance with this Section 11 or Section 14 of this Article II shall be eligible for election by stockholders as directors, and only such business shall be conducted at a meeting of stockholders as shall have been brought before the meeting in accordance with this Section 11. A stockholder proposing a Proposed Nominee shall have no right to (i) nominate a number of Proposed Nominees that exceed the number of directors to be elected at the meeting or (ii) substitute or replace any Proposed Nominee unless such substitute or replacement is nominated in accordance with this Section 11 (including the timely

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provision of all information and certifications with respect to such substitute or replacement Proposed Nominee in accordance with the deadlines set forth in this Section 11). If the Corporation provides notice to a stockholder that the number of Proposed Nominees proposed by such stockholder exceeds the number of directors to be elected at a meeting, the stockholder must provide written notice to the Corporation within five Business Days stating the names of the Proposed Nominees that have been withdrawn so that the number of Proposed Nominees proposed by such stockholder no longer exceeds the number of directors to be elected at a meeting. If any individual who is nominated in accordance with this Section 11 becomes unwilling or unable to serve on the Board of Directors, then the nomination with respect to such individual shall no longer be valid and no votes may validly be cast for such individual. The chair of the meeting shall have the power to determine whether a nomination or any other business proposed to be brought before the meeting was made or proposed, as the case may be, in accordance with this Section 11.

        (3)    Notwithstanding the foregoing provisions of this Section 11, the Corporation shall disregard any proxy authority granted in favor of, or votes for, director nominees other than the Corporation’s nominees if the stockholder or Stockholder Associated Person (each, a “Soliciting Stockholder”) soliciting proxies in support of such director nominees abandons the solicitation or does not (i) comply with Rule 14a-19 promulgated under the Exchange Act, including any failure by the Soliciting Stockholder to (A) provide the Corporation with any notices required thereunder in a timely manner or (B) comply with the requirements of Rule 14a-19(a)(2) and Rule 14a-19(a)(3) promulgated under the Exchange Act or (ii) timely provide sufficient evidence in the determination of the Board of Directors sufficient to satisfy the Corporation that such Soliciting Stockholder has met the requirements of Rule 14a-19(a)(3) promulgated under the Exchange Act in accordance with the following sentence. Upon request by the Corporation, if any Soliciting Stockholder provides notice pursuant to Rule 14a-19(b) promulgated under the Exchange Act (or is not required to provide notice because the information required by Rule 14a-19(b) has been provided in a preliminary or definitive proxy statement previously filed by such Soliciting Stockholder), such Soliciting Stockholder shall deliver to the Corporation, no later than five Business Days prior to the applicable meeting, sufficient evidence in the judgment of the Board of Directors that it has met the requirements of Rule 14a-19(a)(3) promulgated under the Exchange Act.

(4)    For purposes of this Section 11 and Section 14 of this Article II, “the date of the proxy statement” shall have the same meaning as “the date of the company’s proxy statement released to shareholders” as used in Rule 14a-8(e) promulgated under the Exchange Act, as interpreted by the Securities and Exchange Commission from time to time. “Public announcement” shall mean disclosure (i) in a press release reported by the Dow Jones News Service, Associated Press, Business Wire, PR Newswire or other widely circulated news or wire service or (ii) in a document publicly filed by the Corporation with the Securities and Exchange Commission pursuant to the Exchange Act.

        (5)    Notwithstanding the foregoing provisions of this Section 11, a stockholder shall also comply with all applicable requirements of state law and of the Exchange Act with respect to the matters set forth in this Section 11. Nothing in this Section 11 shall be deemed to affect any right of a stockholder to request inclusion of a proposal in, or the right of the Corporation to omit a proposal from, any proxy statement filed by the Corporation with the Securities and Exchange Commission pursuant to Rule 14a-8 (or any successor provision) under the Exchange Act. Nothing in this Section 11 shall require disclosure of revocable proxies received by, or routine solicitation contacts made by or on behalf of, the stockholder or Stockholder Associated Person pursuant to a solicitation of proxies after the filing of an effective Schedule 14A by such stockholder or Stockholder Associated Person under Section 14(a) of the Exchange Act.

        (6)    Notwithstanding anything in these Bylaws to the contrary, except as otherwise determined by the chair of the meeting, if the stockholder giving notice as provided for in this Section 11 does not appear in person or by proxy at such annual or special meeting to present

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each nominee for election as a director or the proposed business, as applicable, such matter shall not be considered at the meeting.

Section 12.    CONTROL SHARE ACQUISITION ACT. Notwithstanding any other provision of the Charter or these Bylaws, Title 3, Subtitle 7 of the Maryland General Corporation Law, or any successor statute (the “MGCL”), shall not apply to any acquisition by any person of shares of stock of the Corporation. This section may be repealed, in whole or in part, at any time, whether before or after an acquisition of control shares and, upon such repeal, may, to the extent provided by any successor bylaw, apply to any prior or subsequent control share acquisition.

Section 13.    STOCKHOLDERS’ CONSENT IN LIEU OF MEETING. Any action required or permitted to be taken at any meeting of stockholders may be taken without a meeting (a) if a unanimous consent setting forth the action is given in writing or by electronic transmission by each stockholder entitled to vote on the matter and filed with the minutes of proceedings of the stockholders or (b) if the action is advised, and submitted to the stockholders for approval, by the Board of Directors and a consent in writing or by electronic transmission of stockholders entitled to cast not less than the minimum number of votes that would be necessary to authorize or take the action at a meeting of stockholders at which all stockholders entitled to vote on the matter are present and vote is delivered to the Corporation in accordance with the MGCL. The Corporation shall give notice of any action taken by less than unanimous consent to each stockholder not later than ten days after the effective time of such action.

    Section 14.    PROXY ACCESS

    (a)    Notwithstanding anything to the contrary in these Bylaws, whenever the Board of Directors solicits proxies with respect to the election of directors at an annual meeting of stockholders, subject to the provisions of this Section 14, the Corporation shall include in its form of proxy, proxy statement and other applicable filings pursuant to Section 14(a) of the Exchange Act (the “Company Proxy Materials”), in addition to the names of any individuals nominated for election by or at the direction of the Board of Directors, the name, together with the Required Information (as defined below), of any individual nominated for election to the Board of Directors (each such individual being hereinafter referred to as a “Stockholder Nominee”) by a stockholder or group of no more than 20 stockholders that satisfies the requirements of this Section 14 (such individual or group, including as the context requires each member thereof, being hereinafter referred to as the “Eligible Stockholder”). For purposes of this Section 14, the “Required Information” is (A) the information provided to the secretary of the Corporation concerning the Stockholder Nominee and the Eligible Stockholder that is required to be disclosed in the Company Proxy Materials by the rules and regulations promulgated under the Exchange Act and (B) if the Eligible Stockholder so elects, a written statement in support of the Stockholder Nominee's candidacy, not to exceed 500 words, delivered to the secretary at the time the Notice of Proxy Access Nomination (as defined below) required by this Section 14 is provided (the “Statement”). Notwithstanding anything to the contrary contained in this Section 14, the Corporation may omit from the Company Proxy Materials any information or Statement (or portion thereof) that the Board of Directors, in its sole discretion, determines (A) is materially false or misleading, (B) omits to state any material fact necessary in order to make such information or Statement, in light of the circumstances under which it was provided or made, not misleading, (C) violates any applicable law or regulation or provision of the Charter or these Bylaws or (D) impugns the character, integrity or personal reputation of a person or makes charges concerning improper, illegal or immoral conduct or associations, in each case without factual foundation. For the avoidance of doubt, and any other provision of these Bylaws notwithstanding, the Corporation may in its sole discretion solicit against and include in Company Proxy Materials its own statements or other information relating to any Eligible Stockholder or Stockholder Nominee, including any information provided to the Corporation with respect to the foregoing.

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    (b)    To be eligible to require the Corporation to include a Stockholder Nominee in the Company Proxy Materials pursuant to this Section 14, an Eligible Stockholder must have Owned (as defined below) at least three percent of the shares of Common Stock (as defined in the Charter) outstanding from time to time (the “Required Shares”) continuously for at least three years (the “Minimum Holding Period”) as of both the date the Notice of Proxy Access Nomination is received by the secretary in accordance with this Section 14 and the close of business on the record date for determining the stockholders entitled to vote at the annual meeting of stockholders, and must thereafter continuously Own the Required Shares through the date of such annual meeting (and any postponement or adjournment thereof). For purposes of this Section 14, an Eligible Stockholder shall be deemed to “Own” only those outstanding shares of Common Stock as to which the Eligible Stockholder possesses both (i) the full voting and investment rights pertaining to the shares and (ii) the full economic interest in (including the opportunity for profit from and risk of loss on) such shares; provided that the number of shares calculated in accordance with clauses (i) and (ii) shall not include any shares (A) sold by such Eligible Stockholder or any of its Affiliates in any transaction that has not been settled or closed, including short sales, (B) borrowed by such Eligible Stockholder or any of its Affiliates for any purpose or purchased by such Eligible Stockholder or any of its Affiliates pursuant to an agreement to resell, (C) that are subject to any option, warrant, forward contract, swap, contract of sale, other derivative or similar instrument, agreement, arrangement or understanding entered into by such Eligible Stockholder or any of its Affiliates, whether any such instrument, agreement, arrangement or understanding is to be settled with shares or with cash or other property based on the notional amount or value of shares of outstanding Common Stock, in any such case which instrument, agreement, arrangement or understanding has, or is intended to have, the purpose or effect of (1) reducing in any manner, to any extent or at any time in the future, such Eligible Stockholder’s or its Affiliate’s full right to vote or direct the voting of any such shares or (2) hedging, offsetting or altering (or attempting to hedge, offset or alter) to any degree any gain or loss arising from the full economic ownership of such shares by such Eligible Stockholder or its Affiliate or (D) for which the Eligible Stockholder or its Affiliate has transferred the right to vote the shares other than by means of a proxy, power of attorney or other instrument or arrangement that is unconditionally revocable at any time by the Eligible Stockholder or its Affiliate and that expressly directs the proxy holder to vote at the direction of the Eligible Stockholder or its Affiliate. In addition, an Eligible Stockholder shall be deemed to “Own” shares of Common Stock held in the name of a nominee or other intermediary so long as the Eligible Stockholder retains the full right to instruct how the shares are voted with respect to the election of directors and possesses the full economic interest in the shares of Common Stock. An Eligible Stockholder's Ownership of shares of Common Stock shall be deemed to continue during any period in which the Eligible Stockholder has loaned such shares provided that the Eligible Stockholder has the power to recall such loaned shares on three Business Days’ notice and has in fact unconditionally recalled such loaned shares as of the time the Notice of Proxy Access Nomination is provided and through the date of the annual meeting of stockholders (and any postponement or adjournment thereof). For purposes of this Section 14, the terms “Owned,” “Owning” and other variations of the word “Own” shall have correlative meanings. Whether and how outstanding shares of Common Stock are “Owned” for these purposes shall be determined by the Board of Directors in its sole discretion.  In addition, the term “Affiliate” or “Affiliates” shall have the meaning ascribed thereto under the Exchange Act.

    (c)    To be eligible to require the Corporation to include a Stockholder Nominee in the Company Proxy Materials pursuant to this Section 14, an Eligible Stockholder must provide to the secretary, in proper form and within the times specified below, (i) a written notice expressly electing to have such Stockholder Nominee included in the Company Proxy Materials pursuant to this Section 14 (a “Notice of Proxy Access Nomination”) and (ii) any updates or supplements to such Notice of Proxy Access Nomination. To be timely, the Notice of Proxy Access Nomination must be received by the secretary at the principal executive office of the Corporation not earlier than the 150th day nor later than 5:00 p.m., Eastern Time, on the 120th day prior to the first anniversary of the date of the proxy statement for the preceding year’s annual meeting; provided, however, that in the event that the date of the annual meeting of stockholders is advanced or delayed by more than 30 days from

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the first anniversary of the date of the preceding year’s annual meeting, the Notice of Proxy Access Nomination to be timely must be so received by the secretary not earlier than the 150th day prior to the date of such annual meeting and not later than 5:00 p.m., Eastern Time, on the later of the 120th day prior to the date of such annual meeting, as originally convened, or the tenth day following the day on which public announcement of the date of such annual meeting is first made. The public announcement of a postponement or an adjournment of an annual meeting shall not commence a new time for the giving of a Notice of Proxy Access Nomination as described above.

    (d)    To be in proper form for purposes of this Section 14, the Notice of Proxy Access Nomination shall include the following information:

        (1)    one or more written statements from the record holder of the Required Shares (and from each intermediary through which the Required Shares are or have been held during the Minimum Holding Period and, if applicable, each participant in the Depository Trust Company (“DTC”) or affiliate of a DTC participant through which the Required Shares are or have been held during the Minimum Holding Period if the intermediary is not a DTC participant or affiliate of a DTC participant) verifying that, as of a date within seven Business Days prior to the date the Notice of Proxy Access Nomination is received by the secretary, the Eligible Stockholder Owns, and has Owned continuously for the Minimum Holding Period, the Required Shares, and the Eligible Stockholder's agreement to provide (A) within five Business Days after the record date for the annual meeting of stockholders, written statements from the record holder or intermediaries between the record holder and the Eligible Stockholder verifying the Eligible Stockholder's continuous Ownership of the Required Shares through the close of business on the record date, together with a written statement by the Eligible Stockholder that such Eligible Stockholder will continue to Own the Required Shares through the date of such annual meeting (and any postponement or adjournment thereof), and (B) the updates and supplements to the Notice of Proxy Access Nomination at the times and in the forms required by this Section 14;

        (2)    a copy of the Schedule 14N filed or to be filed with the Securities and Exchange Commission as required by Rule 14a-18 under the Exchange Act;

        (3)    information that is the same as would be required to be set forth in a stockholder’s notice of nomination pursuant to Sections 11(a)(3) and (4) of Article II of these Bylaws, including the written consent of the Stockholder Nominee to being named in the Company Proxy Materials as a nominee and to serving as a director if elected;

        (4)    the written agreement of the Stockholder Nominee (A) if so requested, to meet in person with members of the Board of Directors and the Corporate Governance and Compensation Committee of the Board of Directors (or any successor committee) on reasonable notice by the Corporation of the time and place and (B) upon such Stockholder Nominee’s election as a director, to make such acknowledgments, enter into such agreements and provide such information as the Board of Directors requires of all directors at such time, including, without limitation, agreeing to be bound by the Corporation's code of conduct, insider trading policy, corporate governance guidelines, confidentiality and other similar policies and procedures;

        (5)    a representation that the Eligible Stockholder (A) acquired the Required Shares in the ordinary course of business and not with the intent to change or influence control of the Corporation, and that neither the Eligible Stockholder nor any Stockholder Nominee being nominated thereby presently has such intent, (B) has not nominated and will not nominate for election to the Board of Directors at the annual meeting of stockholders (or any postponement or adjournment thereof) any individual other than the Stockholder Nominee(s) included in the Company Proxy Materials pursuant to this Section 14, (C) has not engaged and will not engage in, and has not been and will not be a “participant” in another person’s, “solicitation,” each within the meaning of Rule 14a-1(l) under the Exchange Act, in support of the election of any individual as a director at the

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annual meeting (or any postponement or adjournment thereof) other than such Stockholder Nominee(s) or a nominee of the Board of Directors, (D) has complied, and will comply, with all applicable laws and regulations applicable to solicitations and the use, if any, of soliciting material in connection with the annual meeting (or any postponement or adjournment thereof), including, without limitation, Rule 14a-9 under the Exchange Act, (E) will not distribute to any stockholder any form of proxy for the annual meeting other than the form distributed by the Corporation and (F) has not provided and will not provide any facts, statements or information in its communications with the Corporation and the stockholders that were not or will not be true and complete in all material respects or which omitted or will omit to state a material fact necessary in order to make such facts, statements or information, in light of the circumstances under which they were or will be provided, not misleading;

        (6)    a written undertaking that the Eligible Stockholder (A) assumes all liability arising out of any legal or regulatory violation arising out of any communication with the stockholders by the Eligible Stockholder, its Affiliates and associates or their respective agents or representatives, either before or after providing a Notice of Proxy Access Nomination pursuant to this Section 14, or out of the facts, statements or information that the Eligible Stockholder or its Stockholder Nominee(s) provided to the Corporation pursuant to this Section 14 or otherwise in connection with the inclusion of such Stockholder Nominee(s) in the Company Proxy Materials pursuant to this Section 14, and (B) indemnifies and holds harmless the Corporation and each of its directors, officers, agents and employees against any liability, loss or damages in connection with any threatened or pending action, suit or proceeding, whether legal, administrative or investigative, against the Corporation or any of its directors, officers, agents or employees arising out of any nomination of a Stockholder Nominee or inclusion of such Stockholder Nominee in the Company Proxy Materials pursuant to this Section 14;

        (7)    a written description of any compensatory, payment or other agreement, arrangement or understanding with any person or entity other than the Corporation under which the Stockholder Nominee is receiving or will receive compensation or payments directly related to service on the Board of Directors, together with a full and complete copy of any such agreement, arrangement or understanding if written; and

        (8)    in the case of a nomination by a group, the designation by all group members of one group member that is authorized to act on behalf of all group members with respect to matters relating to the nomination, including withdrawal of the nomination.

    Each Stockholder Nominee and the Eligible Stockholder shall promptly furnish such other information (A) as may reasonably be required by the Corporation to determine the eligibility of such Stockholder Nominee to qualify as independent (as determined (i) under the rules and listing standards of any national securities exchange on which any securities of the Corporation are listed and (ii) under Section 3-802(b) of the MGCL), (B) that could be material to a reasonable stockholder's understanding of the independence or lack of independence of such Stockholder Nominee or (C) as may reasonably be required by the Corporation to determine that the Eligible Stockholder meets the criteria for qualification as an Eligible Stockholder.

    (e)    To be eligible to require the Corporation to include a Stockholder Nominee in the Company Proxy Materials pursuant to this Section 14, (i) an Eligible Stockholder must further update and supplement the Notice of Proxy Access Nomination, if necessary, so that the information provided or required to be provided in such Notice of Proxy Access Nomination pursuant to this Section 14 shall be true and complete in all material respects as of the record date for the annual meeting of stockholders and as of the date that is ten Business Days prior to such annual meeting (or any postponement or adjournment thereof), and (ii) such update and supplement (or a written notice stating that there is no such update or supplement) shall be received by the secretary at the principal executive office of the Corporation not later than 5:00 p.m., Eastern Time, on the fifth Business Day

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after the record date for the meeting (in the case of the update and supplement required to be made as of the record date) and not later than 5:00 p.m., Eastern Time, on the eighth Business Day prior to the date of the meeting, if practicable, or, if not practicable, on the first practicable date prior to the meeting (or any postponement or adjournment thereof) (in the case of the update and supplement required to be made as of ten Business Days prior to the meeting (or any postponement or adjournment thereof)).

    (f)    In the event that any fact, statement or information provided by the Eligible Stockholder or a Stockholder Nominee to the Corporation or the stockholders ceases to be true and complete in all material respects or omits a material fact necessary to make such facts, statements or information, in light of the circumstances under which they were provided, not misleading, the Eligible Stockholder or Stockholder Nominee, as the case may be, shall promptly notify the secretary of any defect in such previously provided fact, statement or information and of the fact, statement or information required to correct any such defect, not later than two Business Days after becoming aware of the defect.

    (g)    Whenever an Eligible Stockholder consists of a group of more than one stockholder, each provision in this Section 14 that requires the Eligible Stockholder to provide any written statement, representation, undertaking, agreement or other instrument or to comply with any other requirement or condition shall be deemed to require each stockholder that is a member of such group to provide such statements, representations, undertakings, agreements or other instruments and to meet such other requirements or conditions (which, if applicable, shall apply with respect to the portion of the Required Shares Owned by such stockholder). When an Eligible Stockholder is comprised of a group, a violation of any provision of these Bylaws by any member of the group shall be deemed a violation by the entire group. No person may be a member of more than one group of persons constituting an Eligible Stockholder with respect to any annual meeting of stockholders. In determining the aggregate number of stockholders in a group, two or more funds that are part of the same family of funds under common management and investment control (a “Qualifying Fund Family”) shall be treated as one stockholder. Not later than the deadline for delivery of the Notice of Proxy Access Nomination pursuant to this Section 14, a Qualifying Fund Family whose stock Ownership is counted for purposes of determining whether a stockholder or group of stockholders qualifies as an Eligible Stockholder shall provide to the secretary such documentation as is reasonably satisfactory to the Board of Directors, in its sole discretion, that demonstrates that the funds comprising the Qualifying Fund Family satisfy the definition thereof.

    (h)    The maximum number of Stockholder Nominees nominated by all Eligible Stockholders and entitled to be included in the Company Proxy Materials with respect to an annual meeting of stockholders shall be the lesser of (i) 20% of the number of directors up for election as of the last day on which a Notice of Proxy Access Nomination may be timely delivered pursuant to and in accordance with this Section 14 (the “Final Proxy Access Nomination Date”) or, if such percentage is not a whole number, the closest whole number below such percentage (but not less than one) or (ii) two; provided that the maximum number of Stockholder Nominees entitled to be included in the Company Proxy Materials with respect to a forthcoming annual meeting of stockholders shall be reduced by the number of individuals who were elected as directors at the immediately preceding or second preceding annual meeting of stockholders after inclusion in the Company Proxy Materials pursuant to this Section 14 and whom the Board of Directors nominates for re-election at such forthcoming annual meeting of stockholders. In the event that one or more vacancies for any reason occur on the Board of Directors after the Final Proxy Access Nomination Date but before the date of the annual meeting of stockholders and the Board of Directors elects to reduce the size of the Board of Directors in connection therewith, the maximum number of Stockholder Nominees eligible for inclusion in the Company Proxy Materials pursuant to this Section 14 shall be calculated based on the number of directors as so reduced. Any individual nominated by an Eligible Stockholder for inclusion in the Company Proxy Materials pursuant to this Section 14 whose nomination is subsequently withdrawn or whom the Board of Directors decides to nominate for election to the Board of Directors

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shall be counted as one of the Stockholder Nominees for purposes of determining the maximum number of Stockholder Nominees eligible for inclusion in the Company Proxy Materials pursuant to this Section 14. Any Eligible Stockholder submitting more than one Stockholder Nominee for inclusion in the Company Proxy Materials pursuant to this Section 14 shall rank such Stockholder Nominees based on the order that the Eligible Stockholder desires such Stockholder Nominees be selected for inclusion in the Company Proxy Materials in the event that the total number of Stockholder Nominees submitted by Eligible Stockholders pursuant to this Section 14 exceeds the maximum number of Stockholder Nominees eligible for inclusion in the Company Proxy Materials pursuant to this Section 14(h) and include such ranking in the Notice of Proxy Access Nomination hereunder. In the event the number of Stockholder Nominees submitted by Eligible Stockholders pursuant to this Section 14 exceeds the maximum number of nominees eligible for inclusion in the Company Proxy Materials pursuant to this Section 14(h), the highest-ranking Stockholder Nominee from each Eligible Stockholder pursuant to the preceding sentence shall be selected for inclusion in the Company Proxy Materials until the maximum number of Stockholder Nominees is reached, proceeding in order of the number of shares of Common Stock (largest to smallest) disclosed as Owned by each Eligible Stockholder in the Notice of Proxy Access Nomination submitted to the secretary. If the maximum number is not reached after the highest-ranking Stockholder Nominee from each Eligible Stockholder has been selected, this selection process shall continue as many times as necessary, following the same order each time, until the maximum number is reached. The Stockholder Nominees so selected in accordance with this Section 14(h) shall be the only Stockholder Nominees entitled to be included in the Company Proxy Materials and, following such selection, if the Stockholder Nominees so selected are not included in the Company Proxy Materials or are not submitted for election for any reason (other than the failure of the Corporation to comply with this Section 14), no other Stockholder Nominees shall be included in the Company Proxy Materials pursuant to this Section 14.

    (i)    The Corporation shall not be required to include, pursuant to this Section 14, a Stockholder Nominee in the Company Proxy Materials for any annual meeting of stockholders (i) for which meeting the secretary of the Corporation receives a notice that the Eligible Stockholder or any other stockholder has nominated one or more individuals for election to the Board of Directors pursuant to the advance notice requirements for stockholder nominees for director set forth in Section 11 of Article II of these Bylaws, (ii) if the Eligible Stockholder who has nominated such Stockholder Nominee has engaged in or is currently engaged in, or has been or is a “participant” in another person's, “solicitation,” each within the meaning of Rule 14a-1(l) under the Exchange Act, in support of the election of any individual as a director at the annual meeting other than its Stockholder Nominee(s) or a nominee of the Board of Directors, (iii) if such Stockholder Nominee would not qualify as independent (as determined under the (a) rules and listing standards of any national securities exchange on which any securities of the Corporation are listed or (b) Section 3-802(b) of the MGCL), (iv) if such Stockholder Nominee is or becomes a party to any agreement by which the Stockholder Nominee agrees or commits to vote a certain way on certain matters, (v) if the election of such Stockholder Nominee as a director would cause the Corporation to fail to comply with these Bylaws, the Charter, the rules and listing standards of any national securities exchange on which any securities of the Corporation are listed, or any applicable state or federal law, rule or regulation, (vi) if such Stockholder Nominee is or has been, within the past three years, a director, officer, employee or consultant of a competitor, as defined in Section 8 of the Clayton Antitrust Act of 1914, (vii) if such Stockholder Nominee is a defendant in or named subject of a pending criminal proceeding (excluding traffic violations and other minor offenses) or has been convicted or has pleaded nolo contendere in such a criminal proceeding within the past ten years, (viii) if such Stockholder Nominee is subject to any order of the type specified in Rule 506(d) of Regulation D promulgated under the Securities Act of 1933, as amended, (ix) if the Eligible Stockholder who has nominated such Stockholder Nominee or such Stockholder Nominee provides any fact, statement or information to the Corporation or the stockholders required or requested pursuant to this Section 14 that is not true and complete in all material respects or that omits a material fact necessary to make such facts, statements or information, in light of the circumstances in which they were provided, not misleading, or that

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otherwise contravenes any of the agreements, representations or undertakings made by such Eligible Stockholder or Stockholder Nominee pursuant to this Section 14 or (x) if the Eligible Stockholder who has nominated such Stockholder Nominee or such Stockholder Nominee fails to comply with any of its obligations pursuant to this Section 14, in each instance as determined by the Board of Directors in its sole discretion.

    (j)    Notwithstanding anything to the contrary set forth herein, the Board of Directors or the chair of the meeting shall declare a nomination by an Eligible Stockholder to be invalid and such nomination shall be disregarded notwithstanding that proxies in respect of such vote may have been received by the Corporation, if (i) the Stockholder Nominee(s) and/or the applicable Eligible Stockholder shall have failed to comply with its or their obligations under this Section 14, as determined by the Board of Directors or the chair of the meeting, or (ii) the Eligible Stockholder, or an authorized representative thereof, does not appear at the annual meeting of stockholders to present the nomination of the Stockholder Nominee(s) included in the Company Proxy Materials pursuant to this Section 14. For purposes of this Section 14(j), to be considered an authorized representative of a stockholder, a person must be specifically authorized, by a writing executed by such stockholder or an electronic transmission delivered by such stockholder, to act for such stockholder as its proxy at the annual meeting of stockholders and such person must produce such writing or electronic transmission, or a reliable reproduction thereof, to the Corporation prior to such annual meeting.

    (k)    Any Stockholder Nominee who is included in the Company Proxy Materials for an annual meeting of stockholders but withdraws from or becomes ineligible or unavailable for election to the Board of Directors or is not elected and received the affirmative vote of less than 20% of the votes entitled to be cast in the election of directors at such annual meeting, will be ineligible for inclusion in the Company Proxy Materials as a Stockholder Nominee pursuant to this Section 14 for the next two annual meetings of stockholders. For the avoidance of doubt, this Section 14(k) shall not prevent any stockholder from nominating any individual to the Board of Directors pursuant to and in accordance with Section 11 of Article II of these Bylaws.    

ARTICLE III

DIRECTORS

    Section 1.    GENERAL POWERS. The business and affairs of the Corporation shall be managed under the direction of the Board of Directors.

    Section 2.    NUMBER, TENURE, QUALIFICATIONS AND RESIGNATION. A majority of the entire Board of Directors may establish, increase or decrease the number of directors, provided that the number thereof shall never be less than the minimum number required by the MGCL, nor more than 15, and further provided that the tenure of office of a director shall not be affected by any decrease in the number of directors. Each director that is elected by the stockholders of the Corporation shall serve until the next annual meeting of stockholders and until such director’s successor is duly elected and qualifies. Any director of the Corporation may resign at any time by delivering a resignation to the Board of Directors, the chair of the board or the secretary. Any resignation shall take effect immediately upon its receipt or at such later time specified in the resignation. The acceptance of a resignation shall not be necessary to make it effective unless otherwise stated in the resignation.

    Section 3.    ANNUAL AND REGULAR MEETINGS. An annual meeting of the Board of Directors may be held at such time and place as shall be specified in a notice given as hereinafter provided for special meetings of the Board of Directors. The Board of Directors may provide, by resolution, the time and place of regular meetings of the Board of Directors without other notice than such resolution.

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    Section 4.    SPECIAL MEETINGS. Special meetings of the Board of Directors may be called by or at the request of the chair of the board, the chief executive officer, the president or a majority of the directors then in office. The person or persons authorized to call special meetings of the Board of Directors may fix the time and place of any special meeting of the Board of Directors called by them. The Board of Directors may provide, by resolution, the time and place of special meetings of the Board of Directors without other notice than such resolution.

    Section 5.    NOTICE. Notice of any special meeting of the Board of Directors shall be delivered personally or by telephone, electronic mail, facsimile transmission, courier or United States mail to each director at such director’s business or residence address. Notice by personal delivery, telephone, electronic mail or facsimile transmission shall be given at least 24 hours prior to the meeting. Notice by United States mail shall be given at least three days prior to the meeting. Notice by courier shall be given at least two days prior to the meeting. Telephone notice shall be deemed to be given when the director or such director’s agent is personally given such notice in a telephone call to which the director or such director’s agent is a party. Electronic mail notice shall be deemed to be given upon transmission of the message to the electronic mail address given to the Corporation by the director. Facsimile transmission notice shall be deemed to be given upon completion of the transmission of the message to the number given to the Corporation by the director and receipt of a completed answer-back indicating receipt. Notice by United States mail shall be deemed to be given when deposited in the United States mail properly addressed, with postage thereon prepaid. Notice by courier shall be deemed to be given when deposited with or delivered to a courier properly addressed. Neither the business to be transacted at, nor the purpose of, any annual, regular or special meeting of the Board of Directors need be stated in the notice, unless specifically required by statute or these Bylaws.

    Section 6.    QUORUM. A majority of the directors shall constitute a quorum for the transaction of business at any meeting of the Board of Directors, provided that, if less than a majority of such directors is present at such meeting, a majority of the directors present may adjourn the meeting from time to time without further notice, and provided further that if, pursuant to applicable law, the Charter or these Bylaws, the vote of a majority or other percentage of a specified group of directors is required for action, a quorum must also include a majority or such other percentage of such group.

    The directors present at a meeting which has been duly called and at which a quorum has been established may continue to transact business until adjournment, notwithstanding the withdrawal from the meeting of enough directors to leave fewer than required to establish a quorum.

    Section 7.    VOTING. The action of a majority of the directors present at a meeting at which a quorum is present shall be the action of the Board of Directors, unless the concurrence of a greater proportion is required for such action by applicable law, the Charter or these Bylaws. If enough directors have withdrawn from a meeting to leave fewer than required to establish a quorum, but the meeting is not adjourned, the action of the majority of that number of directors necessary to constitute a quorum at such meeting shall be the action of the Board of Directors, unless the concurrence of a greater proportion is required for such action by applicable law, the Charter or these Bylaws.

    Section 8.    ORGANIZATION. At each meeting of the Board of Directors, the chair of the board or, in the absence of the chair, the vice chair of the board, if any, shall act as chair of the meeting. Even if present at the meeting, the director named herein may designate another director to act as chair of the meeting. In the absence of both the chair of the board and the vice chair of the board, thechief executive officer, or, in the absence of all such individuals, the president or, in the absence of the president, a director chosen by a majority of the directors present, shall act as chair of the meeting. The secretary or, in the secretary’s absence, an assistant secretary of the Corporation,

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or, in the absence of the secretary and all assistant secretaries, an individual appointed by the chair of the meeting, shall act as secretary of the meeting.

    Section 9.    REMOTE COMMUNICATIONS. Directors may participate in a meeting by means of a conference telephone or other remote communications equipment if all persons participating in the meeting can hear each other at the same time. Participation in a meeting by these means shall constitute presence in person at the meeting.

    Section 10.    CONSENT BY DIRECTORS WITHOUT A MEETING. Any action required or permitted to be taken at any meeting of the Board of Directors may be taken without a meeting, if a consent in writing or by electronic transmission to such action is given by each director and is filed with the minutes of proceedings of the Board of Directors.

    Section 11.    VACANCIES. If for any reason any or all the directors cease to be directors, such event shall not terminate the Corporation or affect these Bylaws or the powers of the remaining directors hereunder. Except as may be provided by the Board of Directors in setting the terms of any class or series of preferred stock, any vacancy on the Board of Directors may be filled only by a majority of the remaining directors, even if the remaining directors do not constitute a quorum. Any director elected to fill a vacancy shall serve for the remainder of the full term of the class in which the vacancy occurred and until a successor is elected and qualifies.

    Section 12.    COMPENSATION. Directors shall not receive any stated salary for their services as directors but, by resolution of the Board of Directors, may receive compensation per year and/or per meeting and/or per visit to real property or other facilities owned or leased by the Corporation and for any service or activity they performed or engaged in as directors. Directors may be reimbursed for expenses of attendance, if any, at each annual, regular or special meeting of the Board of Directors or of any committee thereof and for their expenses, if any, in connection with each property visit and any other service or activity they perform or engage in as directors; but nothing herein contained shall be construed to preclude any directors from serving the Corporation in any other capacity and receiving compensation therefor.

    Section 13.    RELIANCE. Each director and officer of the Corporation shall, in the performance of such director’s or officer’s duties with respect to the Corporation, be entitled to rely on any information, opinion, report or statement, including any financial statement or other financial data, prepared or presented by an officer or employee of the Corporation whom the director or officer reasonably believes to be reliable and competent in the matters presented, by a lawyer, certified public accountant or other person, as to a matter which the director or officer reasonably believes to be within the person’s professional or expert competence, or, with respect to a director, by a committee of the Board of Directors on which the director does not serve, as to a matter within its designated authority, if the director reasonably believes the committee to merit confidence.

    Section 14.    RATIFICATION. The Board of Directors or the stockholders may ratify any act, omission, failure to act or determination made not to act (an “Act”) by the Corporation or its officers to the extent that the Board of Directors or the stockholders could have originally authorized the Act and, if so ratified, such Act shall have the same force and effect as if originally duly authorized, and such ratification shall be binding upon the Corporation and its stockholders. Any Act questioned in any proceeding on the ground of lack of authority, defective or irregular execution, adverse interest of a director, officer or stockholder, non-disclosure, miscomputation, the application of improper principles or practices of accounting or otherwise, may be ratified, before or after judgment, by the Board of Directors or by the stockholders, and such ratification shall constitute a bar to any claim or execution of any judgment in respect of such questioned Act.

    Section 15.    EMERGENCY PROVISIONS. Notwithstanding any other provision in the Charter or these Bylaws, this Section 15 shall apply during the existence of any catastrophe, or

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other similar emergency condition, as a result of which a quorum of the Board of Directors under Article III of these Bylaws cannot readily be obtained (an “Emergency”). During any Emergency, unless otherwise provided by the Boardof Directors, (a) a meeting of the Board of Directors or a committee thereof may be called by any director or officer by any means feasible under the circumstances; (b) notice of any meeting of the Board of Directors during such an Emergency may be given less than 24 hours prior to the meeting to as many directors and by such means as may be feasible at the time, including publication, television or radio; and (c) the number of directors necessary to constitute a quorum shall be one-third of the entire Board of Directors.

ARTICLE IV

COMMITTEES

    Section 1.    NUMBER, TENURE AND QUALIFICATIONS. The Board of Directors may appoint from among its members an Audit Committee,a Corporate Governance and Compensation Committee and one or more other committees, composed of one or more directors, to serve at the pleasure of the Board of Directors. In the absence of any member of any such committee, the members thereof present at any meeting, whether or not they constitute a quorum, may appoint another director to act in the place of such absent member.

    Section 2.    POWERS. The Board of Directors may delegate to any committee appointed under Section 1 of this Article any of the powers of the Board of Directors, except as prohibited by law. Except as may be otherwise provided by the Board of Directors, any committee may delegate some or all of its power and authority to one or more subcommittees, composed of one or more directors, as the committee deems appropriate in its sole discretion.

    Section 3.    MEETINGS. Notice of committee meetings shall be given in the same manner as notice for special meetings of the Board of Directors. A majority of the members of the committee shall constitute a quorum for the transaction of business at any meeting of the committee. The act of a majority of the committee members present at a meeting shall be the act of such committee. The Board of Directors, or in the absence of such designation, the applicable committee, may designate a chair of any committee, and such chair or, in the absence of a chair, any two members of any committee (if there are at least two members of the committee) may fix the time and place of its meeting unless the Board shall otherwise provide.

    Section 4.    REMOTE COMMUNICATIONS. Members of a committee of the Board of Directors may participate in a meeting by means of a conference telephone or other remote communications equipment if all persons participating in the meeting can hear each other at the same time. Participation in a meeting by these means shall constitute presence in person at the meeting.

    Section 5.    CONSENT BY COMMITTEES WITHOUT A MEETING. Any action required or permitted to be taken at any meeting of a committee of the Board of Directors may be taken without a meeting, if a consent in writing or by electronic transmission to such action is given by each member of the committee and is filed with the minutes of proceedings of such committee.

    Section 6.    VACANCIES. Subject to the provisions hereof, the Board of Directors shall have the power at any time to change the membership of any committee, to appoint the chair of any committee, to fill any vacancy, to designate an alternate member to replace any absent or disqualified member or to dissolve any such committee.

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ARTICLE V

OFFICERS

    Section 1.    GENERAL PROVISIONS. The officers of the Corporation shall includea president, a secretary and a treasurer and may include a chair of the board, a vice chair of the board, a chief executive officer, one or more vice presidents, a chief operating officer, a chief financial officer, one or more assistant secretaries and one or more assistant treasurers. In addition, the Board of Directors may from time to time elect such other officers with such powers and duties as it shall deem necessary or appropriate. The officers of the Corporation shall be elected annually by the Board of Directors, except that the chief executive officer or president may from time to time appoint one or more vice presidents, assistant secretaries and assistant treasurers or other officers. Each officer shall serve until such officer’s successor is elected and qualifies or until such officer’s death, or such officer’s resignation or removal in the manner hereinafter provided. Any two or more offices except president and vice president may be held by the same person. Election of an officer or agent shall not of itself create contract rights between the Corporation and such officer or agent.

    Section 2.    REMOVAL AND RESIGNATION. Any officer or agent of the Corporation may be removed, with or without cause, by the Board of Directors, but such removal shall be without prejudice to the contract rights, if any, of the person so removed. Any officer of the Corporation may resign at any time by delivering a resignation to the Board of Directors, the chair of the board, the chief executive officer, the president or the secretary. Any resignation shall take effect immediately upon its receipt or at such later time specified in the resignation. The acceptance of a resignation shall not be necessary to make it effective unless otherwise stated in the resignation. Such resignation shall be without prejudice to the contract rights, if any, of the Corporation.

    Section 3.    VACANCIES. A vacancy in any office may be filled by the Board of Directors for the balance of the term.

    Section 4.    CHAIR OF THE BOARD. The Board of Directors may designate from among its members a chair of the board, who shall not, solely by reason of these Bylaws, be an officer of the Corporation. The Board of Directors may designate the chair of the board as an executive or non-executive chair. The chair of the board shall preside over the meetings of the Board of Directors. The chair of the board shall perform such other duties as may be assigned to the chair of the board by these Bylaws or the Board of Directors.

    Section 5.    CHIEF EXECUTIVE OFFICER. The Board of Directors may designate a chief executive officer. In the absence of such designation, the chair of the board shall be the chief executive officer of the Corporation. The chief executive officer shall have general responsibility for implementation of the policies of the Corporation, as determined by the Board of Directors, and for the management of the business and affairs of the Corporation. The chief executive officer may execute any deed, mortgage, bond, contract or other instrument, except in cases where the execution thereof shall be expressly delegated by the Board of Directors or by these Bylaws to some other officer or agent of the Corporation or shall be required by law to be otherwise executed; and in general shall perform all duties incident to the office of chief executive officer and such other duties as may be prescribed by the Board of Directors from time to time.

    Section 6.    CHIEF OPERATING OFFICER. The Board of Directors may designate a chief operating officer. The chief operating officer shall have the responsibilities and duties as determined by the Board of Directors or the chief executive officer.

    Section 7.    CHIEF FINANCIAL OFFICER. The Board of Directors may designate a chief financial officer. The chief financial officer shall have the responsibilities and duties as determined by the Board of Directors or the chief executive officer.

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    Section 8.    PRESIDENT. In the absence of a chief executive officer, the president shall in general supervise and control all of the business and affairs of the Corporation. In the absence of a designation of a chief operating officer by the Board of Directors, the president shall be the chief operating officer. The president may execute any deed, mortgage, bond, contract or other instrument, except in cases where the execution thereof shall be expressly delegated by the Board of Directors or by these Bylaws to some other officer or agent of the Corporation or shall be required by law to be otherwise executed; and in general shall perform all duties incident to the office of president and such other duties as may be prescribed by the Board of Directors from time to time.

    Section 9.    VICE PRESIDENTS. In the absence of the president or in the event of a vacancy in such office, the vice president (or in the event there be more than one vice president, the vice presidents in the order designated at the time of their election or, in the absence of any designation, then in the order of their election) shall perform the duties of the president and when so acting shall have all the powers of and be subject to all the restrictions upon the president; and shall perform such other duties as from time to time may be assigned to such vice president by the chief executive officer, the president or the Board of Directors. The Board of Directors may designate one or more vice presidents as executive vice president, senior vice president, or vice president for particular areas of responsibility.

    Section 10.    SECRETARY. The secretary shall (a) keep the minutes of the proceedings of the stockholders, the Board of Directors and committees of the Board of Directors in one or more books provided for that purpose; (b) see that all notices are duly given in accordance with the provisions of these Bylaws or as required by law; (c) be custodian of the corporate records and of the seal of the Corporation; (d) keep a register of the address of each stockholder which shall be furnished to the secretary by such stockholder; (e) have general charge of the stock transfer books of the Corporation; and (f) in general perform such other duties as from time to time may be assigned to the secretary by the chief executive officer, the president or the Board of Directors.

    Section 11.    TREASURER. The treasurer shall have the custody of the funds and securities of the Corporation, shall keep full and accurate accounts of receipts and disbursements in books belonging to the Corporation, shall deposit all moneys and other valuable effects in the name and to the credit of the Corporation in such depositories as may be designated by the Board of Directors and in general perform such other duties as from time to time may be assigned to the treasurer by the chief executive officer, the president or the Board of Directors. In the absence of a designation of a chief financial officer by the Board of Directors, the treasurer shall be the chief financial officer of the Corporation.

    The treasurer shall disburse the funds of the Corporation as may be ordered by the Board of Directors, taking proper vouchers for such disbursements, and shall render to the president and Board of Directors, at the regular meetings of the Board of Directors or whenever it may so require, an account of all the transactions as treasurer and of the financial condition of the Corporation.

    Section 12.    ASSISTANT SECRETARIES AND ASSISTANT TREASURERS. The assistant secretaries and assistant treasurers, in general, shall perform such duties as shall be assigned to them by the secretary or treasurer, respectively, or by the chief executive officer, the president or the Board of Directors.

    Section 13.    COMPENSATION. The compensation of the officers shall be fixed from time to time by or under the authority of the Board of Directors and no officer shall be prevented from receiving such compensation by reason of the fact that such officer is also a director.

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ARTICLE VI

CONTRACTS, CHECKS AND DEPOSITS

    Section 1.    CONTRACTS. The Board of Directors may authorize any officer or agent to enter into any contract or to execute and deliver any instrument in the name of and on behalf of the Corporation and such authority may be general or confined to specific instances. Any agreement, deed, mortgage, lease or other document shall be valid and binding upon the Corporation when duly authorized or ratified by action of the Board of Directorsand executed by an authorized person.

    Section 2.    CHECKS AND DRAFTS. All checks, drafts or other orders for the payment of money, notes or other evidences of indebtedness issued in the name of the Corporation shall be signed by such officer or agent of the Corporation in such manner as shall from time to time be determined by the Board of Directors.

    Section 3.    DEPOSITS. All funds of the Corporation not otherwise employed shall be deposited or invested from time to time to the credit of the Corporation as the Board of Directors, the chief executive officer, the president, the chief financial officer, or any other officer designated by the Board of Directors may determine.

ARTICLE VII

STOCK

    Section 1.    CERTIFICATES. Except as may be otherwise provided by the Board of Directors or any officer of the Corporation, stockholders of the Corporation are not entitled to certificates representing the shares of stock held by them. In the event that the Corporation issues shares of stock represented by certificates, such certificates shall be in such form as prescribed by the Board of Directors or a duly authorized officer, shall contain the statements and information required by the MGCL and shall be signed by the officers of the Corporation in any manner permitted by the MGCL. In the event that the Corporation issues shares of stock without certificates, to the extent then required by the MGCL the Corporation shall provide to the record holders of such shares a written statement of the information required by the MGCL to be included on stock certificates. There shall be no difference in the rights and obligations of stockholders based on whether or not their shares are represented by certificates.

    Section 2.    TRANSFERS. All transfers of shares of stock shall be made on the books of the Corporation in such manner as the Board of Directors or any officer of the Corporation may prescribe and, if such shares are certificated, upon surrender of certificates duly endorsed. The issuance of a new certificate upon the transfer of certificated shares is subject to the determination of the Board of Directors or an officer of the Corporation that such shares shall no longer be represented by certificates. Upon the transfer of any uncertificated shares, the Corporation shall provide to the record holders of such shares, to the extent then required by the MGCL, a written statement of the information required by the MGCL to be included on stock certificates.

    The Corporation shall be entitled to treat the holder of record of any share of stock as the holder in fact thereof and, accordingly, shall not be bound to recognize any equitable or other claim to or interest in such share or on the part of any other person, whether or not it shall have express or other notice thereof, except as otherwise expressly provided by the laws of the State of Maryland.

    Notwithstanding the foregoing, transfers of shares of any class or series of stock will be subject in all respects to the Charter and all of the terms and conditions contained therein.

24

    Section 3.    REPLACEMENT CERTIFICATE. Any officer of the Corporation may direct a new certificate or certificates to be issued in place of any certificate or certificates theretofore issued by the Corporation alleged to have been lost, destroyed, stolen or mutilated, upon the making of an affidavit of that fact by the person claiming the certificate to be lost, destroyed, stolen or mutilated; provided, however, if such shares have ceased to be certificated, no new certificate shall be issued unless requested in writing by such stockholder and the Board of Directors or an officer of the Corporation has determined that such certificates may be issued. Unless otherwise determined by an officer of the Corporation, the owner of such lost, destroyed, stolen or mutilated certificate or certificates, or such owner’s legal representative, shall be required, as a condition precedent to the issuance of a new certificate or certificates, to give the Corporation a bond in such sums as it may direct as indemnity against any claim that may be made against the Corporation.

    Section 4.    FIXING OF RECORD DATE. The Board of Directors may set, in advance, a record date for the purpose of determining stockholders entitled to notice of or to vote at any meeting of stockholders or determining stockholders entitled to receive payment of any dividend or the allotment of any other rights, or in order to make a determination of stockholders for any other proper purpose. Such record date, in any case, shall not be prior to the close of business on the day the record date is fixed and shall be not more than 90 days and, in the case of a meeting of stockholders, not less than ten days, before the date on which the meeting or particular action requiring such determination of stockholders of record is to be held or taken.

    When a record date for the determination of stockholders entitled to notice of or to vote at any meeting of stockholders has been set as provided in this section, such record date shall continue to apply to the meeting if postponed or adjourned, except if the meeting is postponed or adjourned to a date more than 120 days after the record date originally fixed for the meeting, in which case a new record date for such meeting shall be determined as set forth herein.

    Section 5.    STOCK LEDGER. The Corporation shall maintain at its principal office or at the office of its counsel, accountants or transfer agent, an original or duplicate stock ledger containing the name and address of each stockholder and the number of shares of each class held by such stockholder.

    Section 6.    FRACTIONAL STOCK; ISSUANCE OF UNITS. The Board of Directors may authorize the Corporation to issue fractional shares of stock or authorize the issuance of scrip, all on such terms and under such conditions as it may determine. Notwithstanding any other provision of the Charter or these Bylaws, the Board of Directors may authorize the issuance of units consisting of different securities of the Corporation.

ARTICLE VIII

ACCOUNTING YEAR

    The Board of Directors shall have the power, from time to time, to fix the fiscal year of the Corporation by a duly adopted resolution.

ARTICLE IX

DISTRIBUTIONS

    Section 1.    AUTHORIZATION. Dividends and other distributions upon the stock of the Corporation may be authorized by the Board of Directors, subject to the provisions of law and the Charter. Dividends and other distributions may be paid in cash, property or stock of the Corporation, subject to the provisions of law and the Charter.

25

    Section 2.    CONTINGENCIES. Before payment of any dividend or other distribution, there may be set aside out of any assets of the Corporation available for dividends or other distributions such sum or sums as the Board of Directors may from time to time, in its sole discretion, think proper as a reserve fund for contingencies, for equalizing dividends, for repairing or maintaining any property of the Corporation or for such other purpose as the Board of Directors shall determine, and the Board of Directors may modify or abolish any such reserve.

ARTICLE X

SEAL

    Section 1.    SEAL. The Board of Directors may authorize the adoption of a seal by the Corporation. The seal shall contain the name of the Corporation and the year of its incorporation and the words “Incorporated Maryland.” The Board of Directors may authorize one or more duplicate seals and provide for the custody thereof.

    Section 2.    AFFIXING SEAL. Whenever the Corporation is permitted or required to affix its seal to a document, it shall be sufficient to meet the requirements of any law, rule or regulation relating to a seal to place the word “(SEAL)” adjacent to the signature of the person authorized to execute the document on behalf of the Corporation.

ARTICLE XI

WAIVER OF NOTICE

    Whenever any notice of a meeting is required to be given pursuant to the Charter or these Bylaws or pursuant to applicable law, a waiver thereof in writing or by electronic transmission, given by the person or persons entitled to such notice, whether before or after the time stated therein, shall be deemed equivalent to the giving of such notice. Neither the business to be transacted at nor the purpose of any meeting need be set forth in the waiver of notice of such meeting, unless specifically required by statute. The attendance of any person at any meeting shall constitute a waiver of notice of such meeting, except where such person attends a meeting for the express purpose of objecting to the transaction of any business on the ground that the meeting has not been lawfully called or convened.

ARTICLE XII

EXCLUSIVE FORUM FOR CERTAIN LITIGATION

    Unless the Corporation consents in writing to the selection of an alternative forum, the Circuit Court for Baltimore City, Maryland, or, if that court does not have jurisdiction, the United States District Court for the District of Maryland, Northern Division, shall be the sole and exclusive forum for (a) any Internal Corporate Claim, as such term is defined in the MGCL, or any successor provision thereof, (b) any derivative action or proceeding brought on behalf of the Corporation, other than actions arising under federal securities laws, (c) any action asserting a claim of breach of any duty owed by any director or officer or other employee of the Corporation to the Corporation or to the stockholders of the Corporation, (d) any action asserting a claim against the Corporation or any director or officer or other employee of the Corporation arising pursuant to any provision of the MGCL or the Charter or these Bylaws, or (e) any other action asserting a claim against the Corporation or any director or officer or other employee of the Corporation that is governed by the internal affairs doctrine.  None of the foregoing actions, claims or proceedings may be brought in any court sitting outside the State of Maryland unless the Corporation consents in writing to such court.

26

ARTICLE XIII

AMENDMENT OF BYLAWS

The Board of Directors shall have the exclusive power to adopt, alter or repeal any provision of these Bylaws and to make new Bylaws.

27

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 period ended June 30, 2023;

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)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) 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)Designed such internal controls over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(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 8, 2023	/s/ Andrew Spodek
	Andrew Spodek, Chief Executive Officer (Principal Executive Officer) Postal Realty Trust, Inc.

EX-31.2

EXHIBIT 31.2

CERTIFICATION OF CHIEF FINANCIAL 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, Robert B. Klein, certify that:

1.I have reviewed this Quarterly Report on Form 10-Q of Postal Realty Trust, Inc. (the “registrant”) for the period ended June 30, 2023;

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)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) 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)Designed such internal controls over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(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 8, 2023	/s/ Robert B. Klein
	Robert B. Klein Chief Financial Officer (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 of Postal Realty Trust, Inc. (the “Company”) on Form 10-Q for the period ended June 30, 2023, 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 REALITY TRUST, INC.
Date: August 8, 2023	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 Chief Financial Officer

In connection with the Quarterly Report of Postal Realty Trust, Inc. (the “Company”) on Form 10-Q for the period ended June 30, 2023, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Robert B. Klein, Chief Financial 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 REALITY TRUST, INC.
Date: August 8, 2023	By:	/s/ Robert B. Klein
		Robert B. Klein
		Chief Financial Officer
		(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

Cover - shares	6 Months Ended
	Jun. 30, 2023	Aug. 07, 2023
Cover [Abstract]
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Jun. 30, 2023
Document Transition Report	false
Entity File Number	001-38903
Entity Registrant Name	POSTAL REALTY TRUST, INC.
Entity Incorporation, State or Country Code	MD
Entity Tax Identification Number	83-2586114
Entity Address, Address Line One	75 Columbia Avenue
Entity Address, City or Town	Cedarhurst
Entity Address, State or Province	NY
Entity Address, Postal Zip Code	11516
City Area Code	516
Local Phone Number	295-7820
Title of 12(b) Security	Class A Common Stock, par value $0.01 per share
Trading Symbol	PSTL
Security Exchange Name	NYSE
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Non-accelerated Filer
Entity Small Business	true
Entity Emerging Growth Company	true
Entity Ex Transition Period	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		20,621,598
Current Fiscal Year End Date	--12-31
Amendment Flag	false
Entity Central Index Key	0001759774
Document Fiscal Year Focus	2023
Document Fiscal Period Focus	Q2

XML

Consolidated Balance Sheets - USD ($) $ in Thousands	Jun. 30, 2023	Dec. 31, 2022
Real estate properties, at cost:
Land	$ 96,063	$ 90,020
Building and improvements	405,927	378,596
Tenant improvements	6,643	6,375
Total real estate properties, at cost	508,633	474,991
Less: Accumulated depreciation	(37,286)	(31,257)
Total real estate properties, net	471,347	443,734
Investment in financing leases, net	16,083	16,130
Total real estate investments, net	487,430	459,864
Cash	2,191	1,495
Escrow and reserves	751	547
Rent and other receivables	3,936	4,613
Prepaid expenses and other assets, net	15,225	15,968
Goodwill	1,536	1,536
Deferred rent receivable	1,356	1,194
In-place lease intangibles, net	14,340	15,687
Above market leases, net	385	399
Total Assets	527,150	501,303
Liabilities:
Term loans, net	163,887	163,753
Revolving credit facility	29,000	0
Secured borrowings, net	32,822	32,909
Accounts payable, accrued expenses and other, net	7,996	9,109
Below market leases, net	11,875	11,821
Total Liabilities	245,580	217,592
Commitments and Contingencies
Equity:
Class A common stock, par value $0.01 per share; 500,000,000 shares authorized; 20,002,769 and 19,528,066 shares issued and outstanding as of June 30, 2023 and December 31, 2022, respectively	200	195
Class B common stock, par value $0.01 per share; 27,206 shares authorized: 27,206 shares issued and outstanding as of June 30, 2023 and December 31, 2022	0	0
Additional paid-in capital	258,331	254,107
Accumulated other comprehensive income	7,934	7,486
Accumulated deficit	(40,754)	(32,557)
Total Stockholders’ Equity	225,711	229,231
Operating Partnership unitholders’ non-controlling interests	55,859	54,480
Total Equity	281,570	283,711
Total Liabilities and Equity	$ 527,150	$ 501,303

XML

Consolidated Balance Sheets (Parentheticals) - $ / shares	Jun. 30, 2023	Dec. 31, 2022
Class A common stock
Common stock, par value (in dollars per share)	$ 0.01	$ 0.01
Common stock, shares authorized (in shares)	500,000,000	500,000,000
Common stock, shares issued (in shares)	20,002,769	19,528,066
Common stock, shares outstanding (in shares)	20,002,769	19,528,066
Class B common stock
Common stock, par value (in dollars per share)	$ 0.01	$ 0.01
Common stock, shares authorized (in shares)	27,206	27,206
Common stock, shares issued (in shares)	27,206	27,206
Common stock, shares outstanding (in shares)	27,206	27,206

XML

Consolidated Statements of Operations and Comprehensive Income (Unaudited) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Revenues:
Rental income	$ 14,762	$ 12,135	$ 29,261	$ 23,484
Fee and other	695	589	1,344	1,171
Total revenues	15,457	12,724	30,605	24,655
Operating expenses:
Real estate taxes	2,029	1,705	4,012	3,295
Property operating expenses	1,414	1,230	3,038	2,760
General and administrative	3,610	3,309	7,769	6,950
Depreciation and amortization	4,781	4,219	9,618	8,329
Total operating expenses	11,834	10,463	24,437	21,334
Income from operations	3,623	2,261	6,168	3,321
Other income	125	187	239	674
Interest expense, net:
Contractual interest expense	(2,302)	(1,111)	(4,347)	(1,797)
Write-off and amortization of deferred financing fees	(165)	(155)	(330)	(284)
Interest income	1	1	1	1
Total interest expense, net	(2,466)	(1,265)	(4,676)	(2,080)
Income before income tax expense	1,282	1,183	1,731	1,915
Income tax expense	(21)	(18)	(37)	(29)
Net income	1,261	1,165	1,694	1,886
Net income attributable to Operating Partnership unitholders’ non-controlling interests	(249)	(212)	(334)	(338)
Net income attributable to common stockholders	$ 1,012	$ 953	$ 1,360	$ 1,548
Net income per share:
Basic (in dollars per share)	$ 0.03	$ 0.04	$ 0.04	$ 0.06
Diluted (in dollars per share)	$ 0.03	$ 0.04	$ 0.04	$ 0.06
Weighted average common shares outstanding:
Basic (in shares)	19,544,833	18,398,808	19,417,304	18,383,544
Diluted (in shares)	19,544,833	18,398,808	19,417,304	18,383,544
Comprehensive income:
Net income	$ 1,261	$ 1,165	$ 1,694	$ 1,886
Unrealized gain on derivative instruments	3,399	504	562	3,015
Comprehensive income	4,660	1,669	2,256	4,901
Comprehensive income attributable to Operating Partnership unitholders’ non-controlling interests	(921)	(304)	(448)	(869)
Comprehensive income attributable to common stockholders	$ 3,739	$ 1,365	$ 1,808	$ 4,032

XML

Consolidated Statements of Changes in Equity (Deficit) (Unaudited) - USD ($) $ in Thousands	Total	Total Stockholders’ equity	Common Stock	Additional Paid-in Capital	Accumulated Other Comprehensive Income (Loss)	Accumulated Deficit	Operating Partnership unitholders’ non-controlling interests
Beginning balance at Dec. 31, 2021	$ 265,473	$ 220,042	$ 186	$ 237,969	$ 766	$ (18,879)	$ 45,431
Beginning balance (in shares) at Dec. 31, 2021			18,591,627
Issuance of OP Units in connection with transaction	3,238						3,238
Issuance and amortization of equity-based compensation, net of forfeitures	1,799	1,428	$ 2	1,426			371
Issuance and amortization of equity-based compensation (in shares)			199,102
Issuance and amortization under ESPP	100	100		100
Issuance and amortization under ESPP (in shares)			5,387
Restricted stock withholdings	(62)	(62)		(62)
Restricted stock withholdings (in shares)			(3,492)
Dividends and distributions	(5,197)	(4,295)				(4,295)	(902)
Accumulated other comprehensive income	2,511	2,072			2,072		439
Net income	721	595				595	126
Reallocation of non-controlling interest	0	346		346			(346)
Ending balance at Mar. 31, 2022	268,583	220,226	$ 188	239,779	2,838	(22,579)	48,357
Ending balance (in shares) at Mar. 31, 2022			18,792,624
Beginning balance at Dec. 31, 2021	265,473	220,042	$ 186	237,969	766	(18,879)	45,431
Beginning balance (in shares) at Dec. 31, 2021			18,591,627
Net income	1,886
Ending balance at Jun. 30, 2022	267,699	217,873	$ 188	240,403	3,250	(25,968)	49,826
Ending balance (in shares) at Jun. 30, 2022			18,777,563
Beginning balance at Mar. 31, 2022	268,583	220,226	$ 188	239,779	2,838	(22,579)	48,357
Beginning balance (in shares) at Mar. 31, 2022			18,792,624
Issuance of OP Units in connection with transaction	1,987						1,987
Issuance and amortization of equity-based compensation, net of forfeitures	984	618		618			366
Issuance and amortization of equity-based compensation (in shares)			(471)
Issuance and amortization under ESPP	2	2		2
Issuance and amortization under ESPP (in shares)			0
Restricted stock withholdings	(221)	(221)		(221)
Restricted stock withholdings (in shares)			(14,590)
Dividends and distributions	(5,305)	(4,342)				(4,342)	(963)
Accumulated other comprehensive income	504	412			412		92
Net income	1,165	953				953	212
Reallocation of non-controlling interest	0	225		225			(225)
Ending balance at Jun. 30, 2022	267,699	217,873	$ 188	240,403	3,250	(25,968)	49,826
Ending balance (in shares) at Jun. 30, 2022			18,777,563
Beginning balance at Dec. 31, 2022	283,711	229,231	$ 195	254,107	7,486	(32,557)	54,480
Beginning balance (in shares) at Dec. 31, 2022			19,555,272
Net proceeds from sale of common stock	710	710	$ 1	709
Net proceeds from sale of common stock (in shares)			55,082
Shares issued upon redemption of OP units (in shares)			22,798
Shares issued upon redemption of operating partnership units ("OP Units")	0	409		409			(409)
Issuance and amortization of equity-based compensation, net of forfeitures	1,945	1,377	$ 1	1,376			568
Issuance and amortization of equity-based compensation (in shares)			146,627
Issuance and amortization under ESPP	94	94		94
Issuance and amortization under ESPP (in shares)			6,446
Restricted stock withholdings	(327)	(327)		(327)
Restricted stock withholdings (in shares)			(21,310)
Dividends and distributions	(5,963)	(4,787)				(4,787)	(1,176)
Unrealized loss on derivative instrument	(2,837)	(2,279)			(2,279)		(558)
Net income	433	348				348	85
Reallocation of non-controlling interest	0	(2,338)		(2,338)			2,338
Ending balance at Mar. 31, 2023	277,766	222,438	$ 197	254,030	5,207	(36,996)	55,328
Ending balance (in shares) at Mar. 31, 2023			19,764,915
Beginning balance at Dec. 31, 2022	283,711	229,231	$ 195	254,107	7,486	(32,557)	54,480
Beginning balance (in shares) at Dec. 31, 2022			19,555,272
Net income	1,694
Ending balance at Jun. 30, 2023	281,570	225,711	$ 200	258,331	7,934	(40,754)	55,859
Ending balance (in shares) at Jun. 30, 2023			20,029,975
Beginning balance at Mar. 31, 2023	277,766	222,438	$ 197	254,030	5,207	(36,996)	55,328
Beginning balance (in shares) at Mar. 31, 2023			19,764,915
Net proceeds from sale of common stock	3,843	3,843	$ 3	3,840
Net proceeds from sale of common stock (in shares)			265,225
Issuance of OP Units in connection with transaction	548						548
Issuance and amortization of equity-based compensation, net of forfeitures	1,242	684		684			558
Issuance and amortization of equity-based compensation (in shares)			(165)
Issuance and amortization under ESPP	6	6		6
Issuance and amortization under ESPP (in shares)			0
Dividends and distributions	(5,937)	(4,770)				(4,770)	(1,167)
Unrealized loss on derivative instrument	3,399	2,727			2,727		672
Net income	1,261	1,012				1,012	249
Reallocation of non-controlling interest	0	(229)		(229)			229
Ending balance at Jun. 30, 2023	$ 281,570	$ 225,711	$ 200	$ 258,331	$ 7,934	$ (40,754)	$ 55,859
Ending balance (in shares) at Jun. 30, 2023			20,029,975

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Consolidated Statements of Changes in Equity (Deficit) (Unaudited) (Parentheticals) - USD ($) $ in Thousands	Jun. 30, 2023	Mar. 31, 2023	Dec. 31, 2022	Jun. 30, 2022	Mar. 31, 2022	Dec. 31, 2021
Statement of Stockholders' Equity [Abstract]
Stockholders' Equity, Including Portion Attributable to Noncontrolling Interest	$ 281,570	$ 277,766	$ 283,711	$ 267,699	$ 268,583	$ 265,473

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Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022
Cash flows from operating activities:
Net income	$ 1,694	$ 1,886
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	6,071	4,865
Amortization of in-place intangibles	3,547	3,464
Write-off and amortization of deferred financing costs	330	284
Amortization of above/below market leases	(1,176)	(1,022)
Amortization of intangible liability	(49)	(41)
Equity based compensation	3,207	2,691
Deferred rent receivable	(162)	(293)
Deferred rent expense payable	2	5
Other	23	23
Changes in assets and liabilities:
Rent and other receivables	884	834
Prepaid expenses and other assets	1,171	964
Accounts payable, accrued expenses and other	(935)	(603)
Net cash provided by operating activities	14,607	13,057
Cash flows from investing activities:
Acquisition of real estate	(32,863)	(79,879)
Investment in financing leases	0	(10)
Escrows for acquisition and construction deposits	(222)	(568)
Capital improvements	(968)	(1,781)
Insurance proceeds related to property damage claims	0	557
Other investing activities	(28)	(591)
Net cash used in investing activities	(34,081)	(82,272)
Cash flows from financing activities:
Repayments of secured borrowings	(97)	(92)
Proceeds from term loans	0	75,000
Proceeds from revolving credit facility	32,000	92,000
Repayments of revolving credit facility	(3,000)	(87,000)
Redemption of OP Units	(558)	0
Net proceeds from issuance of shares	4,561	0
Deferred offering costs	(107)	(242)
Payments of Debt Issuance Costs	0	(612)
Proceeds from issuance of ESPP shares	79	83
Value of shares withheld for payment of taxes related to employee stock compensation	(467)	(383)
Dividends and distributions	(11,900)	(10,502)
Other financing activities	(137)	(116)
Net cash provided by financing activities	20,374	68,136
Net increase (decrease) in Cash and Escrows and Reserves	900	(1,079)
Cash and Escrows and Reserves at the beginning of period	2,042	7,026
Cash and Escrow and Reserves at the end of period	2,942	5,947
Supplemental Disclosure of Non-Cash Investing and Financing Activities
Reallocation of non-controlling interest	2,567	571
Unrealized gain on interest rate swaps, net	562	3,015
Shares issued upon redemption of OP Units	409	0
OP Units issued for property acquisitions	548	3,773
Right of use assets	0	38
Reclassification of acquisition deposits included in prepaid expenses and other assets	205	504
Write-off of fixed assets no longer in service	151	129
Accrued costs of capital included in accounts payable and accrued expenses	8	11
Reclassification of construction deposits included in prepaid expenses and other assets	113	12
Accrued capital expenditures included in accounts payable and accrued expenses	235	846
OP Units issued for business acquisition	$ 0	$ 1,451

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Organization and Description of Business

6 Months Ended

Jun. 30, 2023

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Organization and Description of Business

Organization and Description of Business

Postal Realty Trust, Inc. (the “Company”) 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 (the “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 (the “OP Units”). Both the Company and the Operating Partnership commenced operations upon completion of the IPO and certain related 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, 2023, the Company held an approximately 80.2% 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 the Company is the primary beneficiary.

As of June 30, 2023, the Company owned a portfolio of 1,364 properties located in 49 states and one territory. The Company’s properties are leased primarily to a single tenant, the United States Postal Service (the “USPS”).

In addition, through its taxable REIT subsidiary (“TRS”), Real Estate Asset Counseling, LLC (“REAC”), the Company provides fee-based third party property management services for an additional 397 properties, which are owned by Andrew Spodek, the Company's chief executive officer ("CEO"), and his affiliates, and certain advisory services to third-party owners of postal properties.

Pursuant to the Company’s articles of amendment and restatement, 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 (the “Voting Equivalency stock”), and up to 100,000,000 shares of preferred stock.

The Company elected to be taxed as a real estate investment trust (“REIT”) under the Internal Revenue Code of 1986, as amended (the “Code”), commencing with the Company's short taxable year ended December 31, 2019, and intends to continue to qualify as a REIT. 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. Additionally, any income earned by the TRS and any other TRS the Company forms in the future will be subject to federal, state and local corporate income tax.

Pursuant to the Jumpstart Our Business Startups Act, the Company qualifies as an emerging growth company (“EGC”). An EGC may choose, as the Company has 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.

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Summary of Significant Accounting Policies

6 Months Ended

Jun. 30, 2023

Accounting Policies [Abstract]

Summary of Significant Accounting Policies

Summary of Significant Accounting Policies

Basis of Presentation

The accompanying unaudited Consolidated Financial Statements include the financial position and results of operations of the Company, the Operating Partnership and its wholly owned subsidiaries.

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. Substantially all of the assets and liabilities of the Company relate to the Operating Partnership.

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 reflects the income attributed to controlling and non-controlling interests.

The accompanying unaudited 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 Financial Statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022. 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, 2023. 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. As discussed in the Consolidated Financial Statements in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022, the Company’s most significant assumptions and estimates are related to the valuation of investments in real estate properties and impairment of long-lived assets. Although management believes its estimates are reasonable, actual results could differ from those estimates.

Offering and Other Costs

Offering costs are recorded in “Total Stockholders’ Equity” on the Consolidated Balance Sheets as a reduction of additional paid-in capital.

Deferred Costs

Financing costs related to the issuance of the Company’s long-term debt, including the term loan facility component of the Company's existing credit facilities (the "Credit Facilities"), are deferred and amortized as an increase to interest expense over the term of the related debt instrument using the straight-line method, which approximates the effective-interest rate method, and are reported as a reduction of the related debt balance on the Consolidated Balance Sheets. Deferred financing costs related to the revolving credit facility component (the "Revolving Credit Facility") of the Credit Facilities are deferred and amortized as an increase to interest expense over the terms of the Revolving Credit Facility and are included in “Prepaid expenses and other assets, net” on the Consolidated Balance Sheets.

Cash and Escrows and Reserves

Cash includes unrestricted cash with a maturity of three months or less. Escrows and reserves consist of restricted cash. The following table provides a reconciliation of cash and escrows and reserves reported within the Consolidated Balance Sheets and Consolidated Statements of Cash Flows:

	As of
	June 30, 2023		December 31, 2022
	(in thousands)
Cash	$	2,191	$	1,495
Escrows and reserves:
Maintenance reserve	260		206
Real estate tax reserve	384		240
ESPP reserve	107		101
Cash and escrows and reserves	$	2,942	$	2,042

Revenue Recognition

The Company has operating lease agreements with tenants, some of which contain provisions for future rental increases. Rental income is recognized on a straight-line basis over the term of the lease. In addition, certain lease agreements provide for reimbursements from tenants for real estate taxes and other recoverable costs, which are recorded on an accrual basis as part of “Rental income” in the Consolidated Statements of Operations and Comprehensive Income. The Company’s determination of the probability to collect lease payments is impacted by numerous factors, including the Company's assessment of the tenant’s creditworthiness, economic conditions, historical experience with the tenant, future prospects for the tenant and the length of the lease term. If leases currently classified as probable of collection are subsequently reclassified as not probable, any outstanding lease receivables (including straight-line rent receivables) would be written-off with a corresponding decrease in rental income.

Fee and other primarily consists of (i) property management fees, (ii) income recognized from properties accounted for as financing leases and (iii) fees earned from providing advisory services to third-party owners of postal properties.

The management fees arise from contractual agreements with entities that are affiliated with the Company’s CEO. Management fee income is recognized as earned under the respective agreements.

Revenue from direct financing leases is recognized over the lease term using the effective interest rate method. At lease inception, the Company records an asset within "Investment in financing leases, net" on the Consolidated Balance Sheets, which represents the Company’s net investment in the direct financing lease. This initial net investment is determined by aggregating the total future minimum lease payments attributable to the direct financing lease and the estimated residual value of the property, if any, less unearned income. Over the lease term, the investment in the direct financing lease is reduced and interest is recognized as revenue in “Fee and other” in the Consolidated Statements of Operations and Comprehensive Income and produces a constant periodic rate of return on the "Investment in financing leases, net".

Revenue from advisory services is generated from service contracts generally based on (i) time and expense arrangements (where the Company recognizes revenues based on hours incurred and contracted rates), (ii) fixed-fee arrangements (where the Company recognizes revenues earned to date by applying the proportional performance method) or (iii) performance-based or contingent arrangements (where the Company recognizes revenues at a point in time when the client receives the benefit of the promised service). Reimbursable expenses for the advisory services, including those relating to travel, out-of-pocket expenses, outside consultants and other outside service costs, are generally included in revenues and in general and administrative expenses in the period in which the expense is incurred.

Fair Value Measurements

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 have realized on disposition of the assets and liabilities as of June 30, 2023 and December 31, 2022. 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 and other assets (excluding derivatives), accounts payable and accrued expenses are carried at amounts which reasonably approximate their fair values as of June 30, 2023 and December 31, 2022 due to their short maturities.

The fair value of the Company’s borrowings under its Credit Facilities approximates carrying value because such borrowings are subject to a variable market rate, which reprices frequently. The fair value was determined using the Adjusted Term SOFR (as defined below) as of June 30, 2023 and December 31, 2022, plus an applicable spread under the Credit Facilities, a Level 2 classification in the fair value hierarchy. The fair value of the Company’s secured borrowings aggregated approximately $27.8 million and $27.5 million as compared to the principal balance of $33.0 million and $33.1 million as of June 30, 2023 and December 31, 2022, respectively. The fair value of the Company’s secured debt was categorized as a Level 3 fair value estimate (as provided by ASC 820, Fair Value Measurements and Disclosures). The fair value of the mortgage debt was determined by discounting the future contractual interest and principal payments by a market rate.

The Company's derivative assets and liabilities, comprised of interest rate swap derivative instruments entered into in connection with the Credit Facilities, are recorded at fair value based on a variety of observable inputs, including contractual terms, interest rate curves, yield curves, measure of volatility and correlations of such inputs. The Company measures its

derivatives at fair value on a recurring basis based on the expected amount of future cash flows on a discounted basis and incorporating a measure of non-performance risk. The fair value of the Company's derivative assets and liabilities was categorized as a Level 2 fair value estimate (as provided by ASC 820, Fair Value Measurements and Disclosures). The Company considers its own credit risk, as well as the credit risk of its counterparties, when evaluating the fair value of its derivative assets and liabilities. As of June 30, 2023 and December 31, 2022, the fair value of the Company’s interest rate swap derivative assets was approximately $9.8 million and $9.2 million, respectively, included in “Prepaid expenses and other assets, net” on the Consolidated Balance Sheets.

Disclosures about fair value of assets and liabilities are based on pertinent information available to management as of June 30, 2023 and December 31, 2022. 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, 2023 and current estimates of fair value may differ significantly from the amounts presented herein.

Derivative Instruments and Hedging Activities

In accordance with ASC 815, Derivatives and Hedging, the Company records all derivative instruments on the Consolidated Balance Sheets at fair value. The accounting for changes in the fair value of derivatives depends on the intended use of the derivative, whether the Company has elected to designate a derivative in a hedging relationship and apply hedge accounting and whether the hedging relationship has satisfied the criteria necessary to apply hedge accounting. Derivatives designated and qualifying as a hedge of the exposure to variability in expected future cash flows are considered cash flow hedges. Hedge accounting generally provides for the matching of the timing of gain or loss recognition on the hedging instrument with the recognition of the changes in the fair value of the hedged asset or liability that are attributable to the hedged risk in a fair value hedge or the earnings effect of the hedged forecasted transactions in a cash flow hedge. The Company may enter into derivative contracts that are intended to economically hedge certain of its risks, even though hedge accounting does not apply or the Company elects not to apply hedge accounting. See Note 6. Derivatives and Hedging Activities for further details.

Impairment of Long-Lived Assets

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, 2023 and 2022.

Concentration of Credit Risks

As of June 30, 2023, the Company’s properties were leased primarily to a single tenant, the USPS. For the six months ended June 30, 2023, approximately 13.3% of the Company’s total rental income, or $3.9 million, was concentrated in Pennsylvania. For the six months ended June 30, 2022, approximately 16.1% of the Company's total rental income, or $3.8 million, was concentrated in Pennsylvania. The ability of the USPS to honor the terms of its leases is dependent upon regulatory, economic, environmental or competitive conditions in Pennsylvania or other regions where the Company operates in and could have a material effect on the Company’s overall business results.

The Company has deposited cash and maintains its bank deposits with large financial institutions in amounts that, from time to time, 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 records forfeitures as a reduction of equity-based compensation expense as such forfeitures 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 to 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. Stockholders’ Equity for further details.

Insurance Accounting

The Company carries liability insurance to mitigate its exposure to certain losses, including those relating to property damage and business interruption. The Company records the estimated amount of expected insurance proceeds for property damage and other losses incurred as an asset (typically a receivable from the insurer) and income up to the amount of the losses incurred when the amount is determinable and approved by the insurance company. Any amount of insurance recovery in excess of the amount of the losses incurred is considered a gain contingency and is not recorded in other income until the amount is determinable and approved by the insurance company. Insurance recoveries for business interruption for lost revenue or profit are accounted for as gain contingencies in their entirety, and therefore are not recorded in income until the amount is determinable and approved by the insurance company.

Earnings per Share

The Company calculates earnings per share ("EPS") based upon the weighted average shares outstanding less issued and outstanding non-vested shares of Class A common stock. As of June 30, 2023 and 2022, the Company had unvested restricted shares of Class A common stock, long term incentive units of the Operating Partnership ("LTIP Units") and certain restricted stock units (“RSUs”), which provide for non-forfeitable rights to dividend and dividend equivalent payments. Accordingly, these unvested restricted shares of Class A common stock, LTIP Units and RSUs are considered participating securities and are included in the computation of basic and diluted EPS pursuant to the two-class method. Diluted EPS is calculated after giving effect to all potential dilutive shares outstanding during the period. See Note 10. Earnings Per Share for further details.

Recently Adopted Accounting Pronouncements

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 changed how entities measure credit losses for most financial assets and certain other instruments that are not measured at fair value through net income. The guidance replaced the previous "incurred loss" model with an "expected loss" approach. The guidance also requires entities to disclose information about how they developed the allowances, including changes in the factors that influenced 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 became effective for the Company and was adopted by the Company on January 1, 2023. Upon adoption of this guidance, the Company had two direct financing leases with a net investment balance aggregating approximately $16.1 million prior to any credit loss adjustment. Historically, the Company has had no collection issues related to these direct financing leases and its other leases in which the Company is the lessor; therefore, the Company assessed the probability of default on these leases based on the lessee’s status as an independent agency of the executive branch of the U.S. federal government, financial condition and business prospects and the remaining term of the leases. Based on the aforementioned, the Company did not recognize any credit loss adjustment for such leases.

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Real Estate Acquisitions

6 Months Ended

Jun. 30, 2023

Real Estate [Abstract]

Real Estate Acquisitions

Real Estate Acquisitions

The following tables summarizes the Company’s acquisitions for the six months ended June 30, 2023. 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 (in thousands, except for the number of properties):

Three Months Ended		Number of Properties	Land		Building and Improvements		Tenant Improvements		In-place lease intangibles		Above- market leases		Below- market leases		Other		Total (1)
2023
March 31, 2023	(2)	39	$	2,802	$	14,271	$	152	$	1,134	$	43	$	(826)	$	—	$	17,576
June 30, 2023	(3)	39	$	3,241	$	12,054	$	117	$	1,066	$	24	$	(483)	$	—	$	16,019
Total		78	$	6,043	$	26,325	$	269	$	2,200	$	67	$	(1,309)	$	—	$	33,595

Explanatory Notes:

(1)Includes closing costs of approximately $0.3 million for the three months ended March 31, 2023 and $0.2 million for the three months ended June 30, 2023.

(2)Includes the acquisition of 39 properties in various states for cash consideration in individual or portfolio transactions for a price of approximately $17.6 million, including closing costs.

(3)Includes the acquisition of 39 properties in various states in individual or portfolio transactions for a price of approximately $16.0 million, including closing costs, which was funded with both the issuance of OP Units to the sellers (valued at approximately $0.5 million using the share price of Class A common stock on the date of each issuance of such OP units) and cash consideration.

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Intangible Assets and Liabilities

6 Months Ended

Jun. 30, 2022

Goodwill and Intangible Assets Disclosure [Abstract]

Intangible Assets and Liabilities

Intangible Assets and Liabilities

The following table summarizes the Company’s intangible assets and liabilities:

As of	Gross Asset (Liability)		Accumulated Amortization		Net Carrying Amount
			(in thousands)
June 30, 2023:
In-place lease intangibles	$	42,274	$	(27,934)	$	14,340
Above-market leases	623		(238)		385
Below-market leases	(20,386)		8,511		(11,875)
December 31, 2022:
In-place lease intangibles	$	40,074	$	(24,387)	$	15,687
Above-market leases	556		(157)		399
Below-market leases	(19,077)		7,256		(11,821)

Amortization of in-place lease intangibles was $1.8 million and $3.5 million for the three and six months ended June 30, 2023, respectively, and $1.7 million and $3.5 million for the three and six months ended June 30, 2022, respectively. This amortization is included in “Depreciation and amortization” in the Consolidated Statements of Operations and Comprehensive Income.

Amortization of acquired above-market leases was $0.04 million and $0.08 million for the three and six months ended June 30, 2023, respectively, and $0.02 million and $0.04 million for the three and six months ended June 30, 2022, respectively,

and is included in “Rental income” in the Consolidated Statements of Operations and Comprehensive Income. Amortization of acquired below-market leases was $0.6 million and $1.3 million for the three and six months ended June 30, 2023, respectively, and $0.5 million and $1.1 million for the three and six months ended June 30, 2022, respectively, and is included in “Rental income” in the Consolidated Statements of Operations and Comprehensive Income.

Future amortization/accretion of these intangibles is below (in thousands):

Year Ending December 31,	In-place lease intangibles		Above-market leases		Below-market leases
2023-Remaining	$	3,208	$	81	$	(1,233)
2024	5,085		124		(2,143)
2025	3,203		89		(1,566)
2026	1,837		67		(1,266)
2027	694		15		(990)
Thereafter	313		9		(4,677)
Total	$	14,340	$	385	$	(11,875)

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Debt

6 Months Ended

Jun. 30, 2023

Debt Disclosure [Abstract]

Debt

Debt

The following table summarizes the Company’s indebtedness as of June 30, 2023 and December 31, 2022 (dollars in thousands):

	Outstanding Balance as of June 30, 2023		Outstanding Balance as of December 31, 2022		Interest Rate at June 30, 2023		Maturity Date
Revolving Credit Facility(1)	$	29,000	$	—	SOFR+148 bps(2)		January 2026
2021 Term Loan(1)	50,000		50,000		SOFR+143 bps(2)		January 2027
2022 Term Loan(1)	115,000		115,000		SOFR+143 bps(2)		February 2028
Secured Borrowings:
Vision Bank(3)	1,409		1,409		3.69	%	September 2041
First Oklahoma Bank(4)	324		333		3.63	%	December 2037
Vision Bank – 2018(5)	844		844		3.69	%	September 2041
Seller Financing(6)	194		282		6.00	%	January 2025
AIG(7)	30,225		30,225		2.80	%	January 2031
Total Principal	226,996		198,093
Unamortized deferred financing costs	(1,287)		(1,431)
Total Debt	$	225,709	$	196,662

Explanatory Notes:

(1)On August 9, 2021, the Company entered into the Credit Facilities, which included the $150.0 million Revolving Credit Facility and the $50.0 million senior unsecured term loan facility (the "2021 Term Loan"). On May 11, 2022, the Company amended the Credit Facilities to, among other things, add a new $75.0 million senior unsecured delayed draw term loan facility (the "2022 Term Loan" and, together with the 2021 Term Loan, the "Term Loans"), replace the London Interbank Offered Rate with the Secured Overnight Financing Rate ("SOFR") as the benchmark interest rate and allow for a decrease in the applicable margin by 0.02% if the Company achieves certain sustainability targets. On December 6, 2022, the Company exercised $40.0 million of term loan accordion under the 2022 Term Loan. On July 24, 2023, the Company amended the Credit Facilities (the "Second Amendment") to, among other things, add a daily simple SOFR-based option to the term SOFR-based floating interest rate option as a benchmark rate for borrowings under the Credit Facilities and further exercised $25.0 million of term loan accordion under the 2021 Term Loan and, on a delayed-draw basis, $10.0 million of term loan accordion under the 2022 Term Loan.

The Credit Facilities include an accordion feature which permits the Company to borrow up to an additional $150.0 million under the Revolving Credit Facility, subject to customary terms and conditions. Subsequent to June 30, 2023, the accordion feature under the Term Loans has been fully exercised. The Revolving Credit Facility matures in January 2026, which may be extended for two six-month periods subject to customary conditions, the 2021 Term Loan matures in January 2027 and the 2022 Term Loan matures in February 2028. Borrowings under the Credit Facilities carry an interest rate of, (i) in the case of the Revolving Credit Facility, either a base rate plus a margin ranging from 0.5% to 1.0% per annum or Adjusted Term SOFR (as defined below) plus a margin ranging from 1.5% to 2.0% per annum, or (ii) in the case of the Term Loans, either a base rate plus a margin ranging from 0.45% to 0.95% per annum or Adjusted Term SOFR plus a margin ranging from 1.45% to 1.95% per annum, in each case depending on the Company's consolidated leverage ratio. With respect to the Revolving Credit Facility, the Company will pay, if the usage is equal to or less than 50%, an unused facility fee of 0.20% per annum, or if the usage is greater than 50%, an unused facility fee of 0.15% per annum, in each case on the average daily unused commitments under the Revolving Credit Facility. The Credit Facilities contain a number of customary financial and non-financial covenants.

During the three and six months ended June 30, 2023, the Company incurred $0.07 million and $0.1 million, respectively, and, during the three and six months ended June 30, 2022, the Company incurred $0.06 million and $0.1 million, respectively, of unused facility fees related to the Revolving Credit Facility. As of June 30, 2023, the Company was in compliance with all of the Credit Facilities’ debt covenants.

(2)Based upon the one-month Adjusted Term SOFR, which is SOFR plus a term SOFR adjustment of 0.10%, subject to a 0% floor (the “Adjusted Term SOFR”). Upon the Company's achievement of certain sustainability targets for 2022, the applicable margins for the Credit Facilities were reduced by 0.02% for the year ending December 31, 2023, which is reflected in the margins noted in the table above.

(3)Five properties are collateralized under this loan and Mr. Spodek also provided a personal guarantee of payment for 50% of the outstanding amount thereunder. The loan has a fixed interest rate of 3.69% for the first five years with interest payments only (ending in October 2026), then adjusting every subsequent five year period thereafter with principal and interest payments to the rate based on the five year weekly average yield on United States Treasury securities adjusted to a constant maturity of five years, as made available to the Board of Governors of the Federal Reserve System (the "Five-Year Treasury Rate"), plus a margin of 2.75%, with a minimum annual rate of 2.75%.

(4)The loan is collateralized by first mortgage liens on four properties and a personal guarantee of payment by Mr. Spodek. The loan has a fixed interest rate of 3.625% for the first five years (ending in August 2026), then adjusting annually thereafter to a variable annual rate of Wall Street Journal Prime Rate with a minimum annual rate of 3.625%.

(5)The loan is collateralized by first mortgage liens on one property and a personal guarantee of payment by Mr. Spodek. The loan has a fixed interest rate of 3.69% for the first five years with interest payments only (ending in October 2026), then adjusting every subsequent five year period thereafter with principal and interest payments to the rate based on the Five-Year Treasury Rate, plus a margin of 2.75%, with a minimum annual rate of 2.75%.

(6)In connection with the acquisition of a property, the Company obtained seller financing secured by the property in the amount of $0.4 million requiring five annual payments of principal and interest of $0.1 million with the first installment due on January 2, 2021 based on a 6.0% interest rate per annum through January 2, 2025.

(7)The loan is secured by a first mortgage lien on an industrial property located in Warrendale, Pennsylvania. The loan has a fixed interest rate of 2.80% with interest-only payments for the first five years and fixed payments of principal and interest thereafter based on a 30-year amortization schedule.

The weighted average maturity date for the Company's indebtedness as of June 30, 2023 and December 31, 2022 was approximately 4.7 years and 5.5 years, respectively.

The scheduled principal repayments of indebtedness as of June 30, 2023 are as follows (in thousands):

Year Ending December 31,	Amount
2023 - Remaining	$	9
2024	112
2025	118
2026	29,636
2027	50,774
Thereafter	146,347
Total	$	226,996

XML

Derivatives and Hedging Activities

6 Months Ended

Jun. 30, 2023

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivatives and Hedging Activities

Derivatives and Hedging Activities

As of June 30, 2023, the Company had five interest rate swaps with a total notional amount of $165.0 million that are used to manage its interest rate risk and fix the SOFR component on the Credit Facilities. Within the $165.0 million, $50.0 million of the swaps mature in January 2027 and fix the interest rate of the 2021 Term Loan at 2.27% as of June 30, 2023. An additional $50.0 million of the swaps mature in February 2028 and fix the first $50.0 million amount outstanding under the 2022 Term Loan at 4.217% as of June 30, 2023. An additional $25.0 million of the swaps mature in February 2028 and fix the additional $25.0 million amount outstanding under the 2022 Term Loan at 4.79% as of June 30, 2023. The remaining $40.0 million of the swaps mature in February 2028 and fix the remaining $40.0 million amount outstanding under the 2022 Term Loan at 4.932% as of June 30, 2023.

On July 24, 2023, in connection with the exercise of $25.0 million term loan accordion under the 2021 Term Loan, the Company further entered into an interest rate swap that effectively fixed the interest rate on the additional $25.0 million of the 2021 Term Loan through January 2027 at 5.736%.

The Company’s objectives in using the interest rate derivatives are to add stability to interest expense and to manage its exposure to interest rate movements. To accomplish these objectives, the Company uses the interest rate swaps as part of its interest rate risk management strategy. The interest rate swaps are designated as cash flow hedges, with any gain or loss recorded in “Accumulated other comprehensive income” on the Consolidated Balance Sheets and subsequently reclassified into interest expense as interest payments are made on the Credit Facilities. During the next twelve months, the Company estimates that an additional $4.7 million will be reclassified from “Accumulated other comprehensive income” as a decrease to interest expense.

The Company does not use derivatives for trading or speculative purposes and currently does not have any derivatives that are not designated as hedges.

The table below presents the effect of the Company’s interest rate swap derivative instruments in the Consolidated Statements of Operations and Comprehensive Income for the three and six months ended June 30, 2023 and 2022 (in thousands):

	For the Three Months Ended June 30,				For the Six Months Ended June 30,
Derivatives in Cash Flow Hedging Relationships (Interest Rate Swaps)	2023		2022		2023		2022
Amount of (loss) gain recognized on derivative in "Accumulated other comprehensive income"	$	4,491	$	375	$	2,553	$	2,801
Amount of gain (loss) reclassified from "Accumulated other comprehensive income" into interest expense	$	1,092	$	(129)	$	1,991	$	(214)

"Interest expense, net" presented in the Consolidated Statements of Operations and Comprehensive Income, in which the effects of cash flow hedges are recorded, totaled $2.5 million and $4.7 million for the three and six months ended June 30, 2023, respectively, and $1.3 million and $2.1 million for the three and six months ended June 30, 2022, respectively.

XML

Leases

6 Months Ended

Jun. 30, 2023

Leases, Operating [Abstract]

Leases

Leases

Lessor Accounting

As of June 30, 2023, the Company's properties were leased primarily to the USPS, with leases expiring at various dates through May 31, 2031. Certain leases had expired and were in holdover status as of June 30, 2023 as discussed below. Certain leases contain renewal, termination and/or purchase options exercisable at the lessee’s election. Therefore, such options are only recognized once they are deemed reasonably certain, typically at the time the option is exercised. All of the Company’s leases are operating leases with the exception of two that are direct financing leases. The Company's operating leases and direct financing leases are described below.

Rental income related to the Company’s leases is recognized on a straight-line basis over the remaining lease term. The Company’s total revenue includes fixed base rental payments provided under the lease and variable payments which principally consist of tenant expense reimbursements for certain property operating expenses, including real estate taxes. The Company elected the practical expedient to account for its lease and non-lease components as a single combined operating lease component under Topic 842. As a result, rental income and tenant reimbursements were aggregated into a single line within rental income in the Consolidated Statements of Operations and Comprehensive Income.

The following table represents rental revenue that the Company recognized related to its operating leases (in thousands):

	For the Three Months Ended June 30,				For the Six Months Ended June 30,
	2023		2022		2023		2022
Fixed payments	$	12,854	$	10,482	$	25,404	$	20,146
Variable payments	1,908		1,653		3,857		3,338
	$	14,762	$	12,135	$	29,261	$	23,484

Future minimum lease payments to be received as of June 30, 2023 under non-cancellable operating leases for the next five years and thereafter are as follows (in thousands):

Year Ending December 31,	Amount (1)(2)
2023 - Remaining	$	21,551
2024	40,391
2025	33,838
2026	25,414
2027	14,190
Thereafter	15,716
Total	$	151,100

Explanatory Notes:

(1)The above minimum lease payments to be received do not include reimbursements from tenants for real estate taxes and other reimbursed expenses.

(2)As of June 30, 2023, the leases at 115 of the Company's properties were expired, and the USPS was occupying such properties as a holdover tenant. As such, the above minimum lease payments to be received do not include payments under these holdover leases. Holdover rent is typically paid as the greater of estimated market rent or the rent amount due under the expired lease.

Purchase Option Provisions

As of June 30, 2023, operating leases for 67 of the Company’s properties provided the USPS with the option to purchase the underlying property either at fair market value or at fixed prices, in each case as of dates set forth in the lease agreement. As of June 30, 2023, 64 of these properties had an aggregate carrying value of approximately $49.2 million with an

aggregate purchase option price of approximately $61.9 million and the remaining three properties had an aggregate carrying value of approximately $2.6 million with purchase options exercisable at fair market value.

Investment in Financing Leases, Net

As of June 30, 2023 and December 31, 2022, financing leases for two of the Company's properties provide the USPS with the option to purchase the underlying property at fixed prices as of dates set forth in the lease agreement. The components of the Company’s net investment in financing leases as of June 30, 2023 and December 31, 2022 are summarized in the table below (in thousands):

	As of June 30, 2023		As of December 31, 2022
Total minimum lease payment receivable	$	32,646	$	33,215
Less: unearned income	(16,563)		(17,085)
Investment in financing leases, net	$	16,083	$	16,130

Revenue earned under direct financing leases for the three and six months ended June 30, 2023 were $0.3 million and $0.5 million, respectively, and for the three and six months ended June 30, 2022 were $0.3 million and $0.6 million, respectively, which is recorded in "Fee and other" in the Consolidated Statements of Operations and Comprehensive Income.

Future lease payments to be received under the Company’s direct financing leases as of June 30, 2023 for the next five years and thereafter are as follows (in thousands):

Year Ending December 31,	Amount
2023 – Remaining	$	568
2024	1,137
2025	1,137
2026	1,137
2027	1,137
Thereafter	27,530
Total	$	32,646

Lessee Accounting

As a lessee, the Company has ground and office leases which were classified as operating leases. As of June 30, 2023, these leases had remaining terms, including renewal options, of one to 56 years and a weighted average remaining lease term of 22.1 years. Operating right-of-use ("ROU") assets and lease liabilities are included in “Prepaid expenses and other assets, net” and “Accounts payable, accrued expense and other, net” on the Consolidated Balance Sheets as follows (in thousands):

	As of June 30, 2023		As of December 31, 2022
ROU asset – operating leases	$	908	$	1,010
Lease liability – operating leases	$	914	$	1,014

The difference between the recorded ROU assets and lease liabilities is mainly due to the reclassification of the below market ground lease intangible asset which was included within the ROU assets recognized upon transition.

Operating lease assets and liabilities are measured at the commencement date based on the present value of future lease payments. As most of the Company’s leases do not provide an implicit rate, the Company uses its incremental borrowing rate based on the information available at the commencement date in determining the present value of future payments. The Company used a discount rate ranging from 4.25% to 6.37% based on the yield of its current borrowings in determining its lease liabilities.

Lease expense for minimum lease payments is recognized on a straight-line basis over the lease term. The lease terms may include options to extend or terminate the lease if it is reasonably certain that the Company will exercise that option.

Operating lease expense for each of the three and six months ended June 30, 2023 and 2022 was $0.06 million and $0.1 million, respectively. See Note 9. Related Party Transactions for more details.

Future minimum lease payments to be paid by the Company as a lessee for operating leases as of June 30, 2023 for the next five years and thereafter are as follows (in thousands):

2023 — Remaining	$	124
2024	121
2025	46
2026	43
2027	43
Thereafter	1,387
Total future minimum lease payments	1,764
Interest discount	(850)
Total	$	914

Leases

Leases

Lessor Accounting

As of June 30, 2023, the Company's properties were leased primarily to the USPS, with leases expiring at various dates through May 31, 2031. Certain leases had expired and were in holdover status as of June 30, 2023 as discussed below. Certain leases contain renewal, termination and/or purchase options exercisable at the lessee’s election. Therefore, such options are only recognized once they are deemed reasonably certain, typically at the time the option is exercised. All of the Company’s leases are operating leases with the exception of two that are direct financing leases. The Company's operating leases and direct financing leases are described below.

Rental income related to the Company’s leases is recognized on a straight-line basis over the remaining lease term. The Company’s total revenue includes fixed base rental payments provided under the lease and variable payments which principally consist of tenant expense reimbursements for certain property operating expenses, including real estate taxes. The Company elected the practical expedient to account for its lease and non-lease components as a single combined operating lease component under Topic 842. As a result, rental income and tenant reimbursements were aggregated into a single line within rental income in the Consolidated Statements of Operations and Comprehensive Income.

The following table represents rental revenue that the Company recognized related to its operating leases (in thousands):

	For the Three Months Ended June 30,				For the Six Months Ended June 30,
	2023		2022		2023		2022
Fixed payments	$	12,854	$	10,482	$	25,404	$	20,146
Variable payments	1,908		1,653		3,857		3,338
	$	14,762	$	12,135	$	29,261	$	23,484

Future minimum lease payments to be received as of June 30, 2023 under non-cancellable operating leases for the next five years and thereafter are as follows (in thousands):

Year Ending December 31,	Amount (1)(2)
2023 - Remaining	$	21,551
2024	40,391
2025	33,838
2026	25,414
2027	14,190
Thereafter	15,716
Total	$	151,100

Explanatory Notes:

(1)The above minimum lease payments to be received do not include reimbursements from tenants for real estate taxes and other reimbursed expenses.

(2)As of June 30, 2023, the leases at 115 of the Company's properties were expired, and the USPS was occupying such properties as a holdover tenant. As such, the above minimum lease payments to be received do not include payments under these holdover leases. Holdover rent is typically paid as the greater of estimated market rent or the rent amount due under the expired lease.

Purchase Option Provisions

As of June 30, 2023, operating leases for 67 of the Company’s properties provided the USPS with the option to purchase the underlying property either at fair market value or at fixed prices, in each case as of dates set forth in the lease agreement. As of June 30, 2023, 64 of these properties had an aggregate carrying value of approximately $49.2 million with an

aggregate purchase option price of approximately $61.9 million and the remaining three properties had an aggregate carrying value of approximately $2.6 million with purchase options exercisable at fair market value.

Investment in Financing Leases, Net

As of June 30, 2023 and December 31, 2022, financing leases for two of the Company's properties provide the USPS with the option to purchase the underlying property at fixed prices as of dates set forth in the lease agreement. The components of the Company’s net investment in financing leases as of June 30, 2023 and December 31, 2022 are summarized in the table below (in thousands):

	As of June 30, 2023		As of December 31, 2022
Total minimum lease payment receivable	$	32,646	$	33,215
Less: unearned income	(16,563)		(17,085)
Investment in financing leases, net	$	16,083	$	16,130

Revenue earned under direct financing leases for the three and six months ended June 30, 2023 were $0.3 million and $0.5 million, respectively, and for the three and six months ended June 30, 2022 were $0.3 million and $0.6 million, respectively, which is recorded in "Fee and other" in the Consolidated Statements of Operations and Comprehensive Income.

Future lease payments to be received under the Company’s direct financing leases as of June 30, 2023 for the next five years and thereafter are as follows (in thousands):

Year Ending December 31,	Amount
2023 – Remaining	$	568
2024	1,137
2025	1,137
2026	1,137
2027	1,137
Thereafter	27,530
Total	$	32,646

Lessee Accounting

As a lessee, the Company has ground and office leases which were classified as operating leases. As of June 30, 2023, these leases had remaining terms, including renewal options, of one to 56 years and a weighted average remaining lease term of 22.1 years. Operating right-of-use ("ROU") assets and lease liabilities are included in “Prepaid expenses and other assets, net” and “Accounts payable, accrued expense and other, net” on the Consolidated Balance Sheets as follows (in thousands):

	As of June 30, 2023		As of December 31, 2022
ROU asset – operating leases	$	908	$	1,010
Lease liability – operating leases	$	914	$	1,014

The difference between the recorded ROU assets and lease liabilities is mainly due to the reclassification of the below market ground lease intangible asset which was included within the ROU assets recognized upon transition.

Operating lease assets and liabilities are measured at the commencement date based on the present value of future lease payments. As most of the Company’s leases do not provide an implicit rate, the Company uses its incremental borrowing rate based on the information available at the commencement date in determining the present value of future payments. The Company used a discount rate ranging from 4.25% to 6.37% based on the yield of its current borrowings in determining its lease liabilities.

Lease expense for minimum lease payments is recognized on a straight-line basis over the lease term. The lease terms may include options to extend or terminate the lease if it is reasonably certain that the Company will exercise that option.

Operating lease expense for each of the three and six months ended June 30, 2023 and 2022 was $0.06 million and $0.1 million, respectively. See Note 9. Related Party Transactions for more details.

Future minimum lease payments to be paid by the Company as a lessee for operating leases as of June 30, 2023 for the next five years and thereafter are as follows (in thousands):

2023 — Remaining	$	124
2024	121
2025	46
2026	43
2027	43
Thereafter	1,387
Total future minimum lease payments	1,764
Interest discount	(850)
Total	$	914

Leases

Leases

Lessor Accounting

As of June 30, 2023, the Company's properties were leased primarily to the USPS, with leases expiring at various dates through May 31, 2031. Certain leases had expired and were in holdover status as of June 30, 2023 as discussed below. Certain leases contain renewal, termination and/or purchase options exercisable at the lessee’s election. Therefore, such options are only recognized once they are deemed reasonably certain, typically at the time the option is exercised. All of the Company’s leases are operating leases with the exception of two that are direct financing leases. The Company's operating leases and direct financing leases are described below.

Rental income related to the Company’s leases is recognized on a straight-line basis over the remaining lease term. The Company’s total revenue includes fixed base rental payments provided under the lease and variable payments which principally consist of tenant expense reimbursements for certain property operating expenses, including real estate taxes. The Company elected the practical expedient to account for its lease and non-lease components as a single combined operating lease component under Topic 842. As a result, rental income and tenant reimbursements were aggregated into a single line within rental income in the Consolidated Statements of Operations and Comprehensive Income.

The following table represents rental revenue that the Company recognized related to its operating leases (in thousands):

	For the Three Months Ended June 30,				For the Six Months Ended June 30,
	2023		2022		2023		2022
Fixed payments	$	12,854	$	10,482	$	25,404	$	20,146
Variable payments	1,908		1,653		3,857		3,338
	$	14,762	$	12,135	$	29,261	$	23,484

Future minimum lease payments to be received as of June 30, 2023 under non-cancellable operating leases for the next five years and thereafter are as follows (in thousands):

Year Ending December 31,	Amount (1)(2)
2023 - Remaining	$	21,551
2024	40,391
2025	33,838
2026	25,414
2027	14,190
Thereafter	15,716
Total	$	151,100

Explanatory Notes:

(1)The above minimum lease payments to be received do not include reimbursements from tenants for real estate taxes and other reimbursed expenses.

(2)As of June 30, 2023, the leases at 115 of the Company's properties were expired, and the USPS was occupying such properties as a holdover tenant. As such, the above minimum lease payments to be received do not include payments under these holdover leases. Holdover rent is typically paid as the greater of estimated market rent or the rent amount due under the expired lease.

Purchase Option Provisions

As of June 30, 2023, operating leases for 67 of the Company’s properties provided the USPS with the option to purchase the underlying property either at fair market value or at fixed prices, in each case as of dates set forth in the lease agreement. As of June 30, 2023, 64 of these properties had an aggregate carrying value of approximately $49.2 million with an

aggregate purchase option price of approximately $61.9 million and the remaining three properties had an aggregate carrying value of approximately $2.6 million with purchase options exercisable at fair market value.

Investment in Financing Leases, Net

As of June 30, 2023 and December 31, 2022, financing leases for two of the Company's properties provide the USPS with the option to purchase the underlying property at fixed prices as of dates set forth in the lease agreement. The components of the Company’s net investment in financing leases as of June 30, 2023 and December 31, 2022 are summarized in the table below (in thousands):

	As of June 30, 2023		As of December 31, 2022
Total minimum lease payment receivable	$	32,646	$	33,215
Less: unearned income	(16,563)		(17,085)
Investment in financing leases, net	$	16,083	$	16,130

Revenue earned under direct financing leases for the three and six months ended June 30, 2023 were $0.3 million and $0.5 million, respectively, and for the three and six months ended June 30, 2022 were $0.3 million and $0.6 million, respectively, which is recorded in "Fee and other" in the Consolidated Statements of Operations and Comprehensive Income.

Future lease payments to be received under the Company’s direct financing leases as of June 30, 2023 for the next five years and thereafter are as follows (in thousands):

Year Ending December 31,	Amount
2023 – Remaining	$	568
2024	1,137
2025	1,137
2026	1,137
2027	1,137
Thereafter	27,530
Total	$	32,646

Lessee Accounting

As a lessee, the Company has ground and office leases which were classified as operating leases. As of June 30, 2023, these leases had remaining terms, including renewal options, of one to 56 years and a weighted average remaining lease term of 22.1 years. Operating right-of-use ("ROU") assets and lease liabilities are included in “Prepaid expenses and other assets, net” and “Accounts payable, accrued expense and other, net” on the Consolidated Balance Sheets as follows (in thousands):

	As of June 30, 2023		As of December 31, 2022
ROU asset – operating leases	$	908	$	1,010
Lease liability – operating leases	$	914	$	1,014

The difference between the recorded ROU assets and lease liabilities is mainly due to the reclassification of the below market ground lease intangible asset which was included within the ROU assets recognized upon transition.

Operating lease assets and liabilities are measured at the commencement date based on the present value of future lease payments. As most of the Company’s leases do not provide an implicit rate, the Company uses its incremental borrowing rate based on the information available at the commencement date in determining the present value of future payments. The Company used a discount rate ranging from 4.25% to 6.37% based on the yield of its current borrowings in determining its lease liabilities.

Lease expense for minimum lease payments is recognized on a straight-line basis over the lease term. The lease terms may include options to extend or terminate the lease if it is reasonably certain that the Company will exercise that option.

Operating lease expense for each of the three and six months ended June 30, 2023 and 2022 was $0.06 million and $0.1 million, respectively. See Note 9. Related Party Transactions for more details.

Future minimum lease payments to be paid by the Company as a lessee for operating leases as of June 30, 2023 for the next five years and thereafter are as follows (in thousands):

2023 — Remaining	$	124
2024	121
2025	46
2026	43
2027	43
Thereafter	1,387
Total future minimum lease payments	1,764
Interest discount	(850)
Total	$	914

Leases

Leases

Lessor Accounting

As of June 30, 2023, the Company's properties were leased primarily to the USPS, with leases expiring at various dates through May 31, 2031. Certain leases had expired and were in holdover status as of June 30, 2023 as discussed below. Certain leases contain renewal, termination and/or purchase options exercisable at the lessee’s election. Therefore, such options are only recognized once they are deemed reasonably certain, typically at the time the option is exercised. All of the Company’s leases are operating leases with the exception of two that are direct financing leases. The Company's operating leases and direct financing leases are described below.

Rental income related to the Company’s leases is recognized on a straight-line basis over the remaining lease term. The Company’s total revenue includes fixed base rental payments provided under the lease and variable payments which principally consist of tenant expense reimbursements for certain property operating expenses, including real estate taxes. The Company elected the practical expedient to account for its lease and non-lease components as a single combined operating lease component under Topic 842. As a result, rental income and tenant reimbursements were aggregated into a single line within rental income in the Consolidated Statements of Operations and Comprehensive Income.

The following table represents rental revenue that the Company recognized related to its operating leases (in thousands):

	For the Three Months Ended June 30,				For the Six Months Ended June 30,
	2023		2022		2023		2022
Fixed payments	$	12,854	$	10,482	$	25,404	$	20,146
Variable payments	1,908		1,653		3,857		3,338
	$	14,762	$	12,135	$	29,261	$	23,484

Future minimum lease payments to be received as of June 30, 2023 under non-cancellable operating leases for the next five years and thereafter are as follows (in thousands):

Year Ending December 31,	Amount (1)(2)
2023 - Remaining	$	21,551
2024	40,391
2025	33,838
2026	25,414
2027	14,190
Thereafter	15,716
Total	$	151,100

Explanatory Notes:

(1)The above minimum lease payments to be received do not include reimbursements from tenants for real estate taxes and other reimbursed expenses.

(2)As of June 30, 2023, the leases at 115 of the Company's properties were expired, and the USPS was occupying such properties as a holdover tenant. As such, the above minimum lease payments to be received do not include payments under these holdover leases. Holdover rent is typically paid as the greater of estimated market rent or the rent amount due under the expired lease.

Purchase Option Provisions

As of June 30, 2023, operating leases for 67 of the Company’s properties provided the USPS with the option to purchase the underlying property either at fair market value or at fixed prices, in each case as of dates set forth in the lease agreement. As of June 30, 2023, 64 of these properties had an aggregate carrying value of approximately $49.2 million with an

aggregate purchase option price of approximately $61.9 million and the remaining three properties had an aggregate carrying value of approximately $2.6 million with purchase options exercisable at fair market value.

Investment in Financing Leases, Net

As of June 30, 2023 and December 31, 2022, financing leases for two of the Company's properties provide the USPS with the option to purchase the underlying property at fixed prices as of dates set forth in the lease agreement. The components of the Company’s net investment in financing leases as of June 30, 2023 and December 31, 2022 are summarized in the table below (in thousands):

	As of June 30, 2023		As of December 31, 2022
Total minimum lease payment receivable	$	32,646	$	33,215
Less: unearned income	(16,563)		(17,085)
Investment in financing leases, net	$	16,083	$	16,130

Revenue earned under direct financing leases for the three and six months ended June 30, 2023 were $0.3 million and $0.5 million, respectively, and for the three and six months ended June 30, 2022 were $0.3 million and $0.6 million, respectively, which is recorded in "Fee and other" in the Consolidated Statements of Operations and Comprehensive Income.

Future lease payments to be received under the Company’s direct financing leases as of June 30, 2023 for the next five years and thereafter are as follows (in thousands):

Year Ending December 31,	Amount
2023 – Remaining	$	568
2024	1,137
2025	1,137
2026	1,137
2027	1,137
Thereafter	27,530
Total	$	32,646

Lessee Accounting

As a lessee, the Company has ground and office leases which were classified as operating leases. As of June 30, 2023, these leases had remaining terms, including renewal options, of one to 56 years and a weighted average remaining lease term of 22.1 years. Operating right-of-use ("ROU") assets and lease liabilities are included in “Prepaid expenses and other assets, net” and “Accounts payable, accrued expense and other, net” on the Consolidated Balance Sheets as follows (in thousands):

	As of June 30, 2023		As of December 31, 2022
ROU asset – operating leases	$	908	$	1,010
Lease liability – operating leases	$	914	$	1,014

The difference between the recorded ROU assets and lease liabilities is mainly due to the reclassification of the below market ground lease intangible asset which was included within the ROU assets recognized upon transition.

Operating lease assets and liabilities are measured at the commencement date based on the present value of future lease payments. As most of the Company’s leases do not provide an implicit rate, the Company uses its incremental borrowing rate based on the information available at the commencement date in determining the present value of future payments. The Company used a discount rate ranging from 4.25% to 6.37% based on the yield of its current borrowings in determining its lease liabilities.

Lease expense for minimum lease payments is recognized on a straight-line basis over the lease term. The lease terms may include options to extend or terminate the lease if it is reasonably certain that the Company will exercise that option.

Operating lease expense for each of the three and six months ended June 30, 2023 and 2022 was $0.06 million and $0.1 million, respectively. See Note 9. Related Party Transactions for more details.

Future minimum lease payments to be paid by the Company as a lessee for operating leases as of June 30, 2023 for the next five years and thereafter are as follows (in thousands):

2023 — Remaining	$	124
2024	121
2025	46
2026	43
2027	43
Thereafter	1,387
Total future minimum lease payments	1,764
Interest discount	(850)
Total	$	914

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Income Taxes

6 Months Ended

Jun. 30, 2023

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

TRS

In connection with the IPO, the Company and REAC jointly elected to treat REAC as a TRS. REAC performs management services, including for properties the Company does not own, and advisory services to third-party owners of postal properties. REAC generates income, resulting in federal and state corporate income tax liability for REAC. For the three and six months ended June 30, 2023, income tax expense related to REAC was $0.01 million and $0.03 million, respectively. For the three and six months ended June 30, 2022, income tax expense related to REAC was $0.02 million and $0.03 million, respectively.

Other

In connection with the IPO, the indirect sole shareholder of United Postal Holdings, Inc. ("UPH"), a portion of the Company's predecessor, 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.

As of December 31, 2022, the Company had remaining unrecognized tax benefits of $0.02 million, which were inclusive of interest and penalties, and a corresponding indemnification asset, which were included in "Prepaid expenses and other assets, net" on the Consolidated Balance Sheets. During the six months ended June 30, 2023, the Company reversed the remaining $0.02 million of unrecognized tax benefits and the corresponding indemnification asset due to the expiration of statute of limitations.

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Related Party Transactions

6 Months Ended

Jun. 30, 2023

Related Party Transactions [Abstract]

Related Party Transactions

Related Party Transactions

Management Fee Income

REAC recognized management fee income of $0.3 million and $0.6 million for the three and six months ended June 30, 2023 and 2022, respectively, from various parties which were affiliated with the Company's CEO. These amounts are included in “Fee and other” in the Consolidated Statements of Operations and Comprehensive Income. Accrued management fees receivable of $0.3 million as of June 30, 2023 and December 31, 2022, respectively, are included in “Rent and other receivables” on the Consolidated Balance Sheets.

Related Party Lease

On May 17, 2019, the Company entered into a lease for office space in Cedarhurst, New York with an entity affiliated with the Company’s CEO (the “Office Lease”). Pursuant to the Office Lease, the monthly rent is $15,000 subject to escalations. The term of the Office Lease is five years commencing on May 17, 2019 and will expire on May 16, 2024. Rental expenses associated with the Office Lease for each of the three and six months ended June 30, 2023 and 2022 were $0.05 million and $0.1 million, respectively, and was recorded in “General and administrative expenses” in the Consolidated Statements of Operations and Comprehensive Income. The Company determined this Office Lease was an operating lease. For further details, see Note 7. Leases.

Guarantees

As disclosed above in Note 5. Debt, Mr. Spodek personally guaranteed a portion of or the entire amount outstanding under the Company's loans with First Oklahoma Bank and Vision Bank, totaling $1.9 million and $1.9 million as of June 30, 2023 and December 31, 2022, respectively. As a guarantor, Mr. Spodek's interests with respect to the amount of debt he is guaranteeing (and the terms of any repayment or default) may not align with the Company’s interests and could result in a conflict of interest.

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Earnings Per Share

6 Months Ended

Jun. 30, 2023

Earnings Per Share [Abstract]

Earnings Per Share

Earnings Per Share

EPS is calculated by dividing net income attributable to common stockholders by the weighted average number of shares outstanding for the period.

The following table presents a reconciliation of income from operations used in the basic and diluted EPS calculations (dollars in thousands, except share and per share data).

	For the Three Months Ended June 30,				For the Six Months Ended June 30,
	2023		2022		2023		2022
Numerator for earnings per share – basic and diluted:
Net income attributable to common stockholders	$	1,012	$	953	$	1,360	$	1,548
Less: Income attributable to participating securities	(346)		(241)		(652)		(470)
Numerator for earnings per share — basic and diluted	$	666	$	712	$	708	$	1,078
Denominator for earnings per share – basic and diluted (1)	19,544,833		18,398,808		19,417,304		18,383,544
Basic and diluted earnings per share	$	0.03	$	0.04	$	0.04	$	0.06

Explanatory Note:

(1) Diluted EPS reflects the potential dilution of the conversion of obligations and the assumed exercises of securities including the effects of restricted shares and RSUs issued under the Company’s 2019 Equity Incentive Plan (the “Plan”) (See Note 11. Stockholders’ Equity). The effect of such shares and RSUs would not be dilutive and were not included in the computation of weighted average number of shares outstanding for the periods presented in the table above. OP Units and LTIP Units are redeemable for cash or, at the Company’s option, shares of Class A common stock on an one-for-one basis. The income allocable to such OP Units and LTIP Units is allocated on this same basis and reflected as non-controlling interests in these unaudited Consolidated Financial Statements. As such, the assumed conversion of these OP Units and LTIP Units would have no net impact on the determination of diluted EPS.

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Stockholder's Equity

6 Months Ended

Jun. 30, 2023

Stockholders' Equity Note [Abstract]

Stockholder’s Equity

Stockholders’ Equity

ATM Program

On November 4, 2022, the Company entered into separate open market sale agreements for its at-the-market offering program (the "ATM Program") with each of Jefferies LLC, BMO Capital Markets Corp., Janney Montgomery Scott LLC,

Stifel, Nicolaus & Company, Incorporated and Truist Securities, Inc., as agents, pursuant to which the Company may offer and sell, from time to time, shares of its Class A common stock having an aggregate sales price of up to $50.0 million. The agreements also provide that the Company may enter into one or more forward sale agreements under separate master forward confirmations and related supplemental confirmations with affiliates of certain agents.

The following table summarizes the activity under the ATM Program for the period presented (dollars in thousands, except per share amounts). During the year ended December 31, 2022, 751,382 shares were issued under the ATM Program and the Company's previous at-the-market offering program. During the three and six months ended June 30, 2023, 265,225 shares and 320,307 shares were issued under the ATM program, respectively. During the three and six months ended June 30, 2022, the Company did not issue any shares under its previous at-the-market offering program. As of June 30, 2023, the Company had approximately $37.0 million remaining that may be issued under the ATM Program.

	Three Months Ended June 30, 2023		Six Months Ended June 30, 2023
Shares issued	265,225		320,307
Gross proceeds	$	3,996	$	4,823
Fees and issuance costs	(153)		(270)
Net proceeds received	$	3,843	$	4,553
Average gross sales price per share	$	15.07	$	15.06

Dividends

During the three and six months ended June 30, 2023, the Company's Board of Directors approved and the Company declared and paid dividends of $5.9 million and $11.8 million, respectively, to Class A common stockholders, Voting Equivalency stockholders, OP unitholders and LTIP unitholders, or $0.2375 per share or unit and $0.475 per share or unit, respectively, as shown in the table below.

Declaration Date	Record Date	Date Paid	Amount Per Share or Unit
February 1, 2023	February 15, 2023	February 28, 2023	$	0.2375
April 24, 2023	May 5, 2023	May 31, 2023	$	0.2375

Non-controlling Interests

Non-controlling interests in the Company represent OP Units held by the Company's prior investors and certain sellers of properties to the Company and LTIP Units primarily issued to the Company’s employees and the Board of Directors in connection with the IPO and/or in lieu of their cash compensation. During the six months ended June 30, 2023, the Company issued 143,288 LTIP Units to the Company’s CEO for his 2022 incentive bonus, his election to defer 100% of his 2023 annual salary and for long term incentive compensation, 75,489 LTIP Units to the Company’s president for his 2022 incentive bonus and his election to defer 50% of his 2023 annual salary, 57,057 LTIP Units to the Company's Chief Financial Officer for his 2022 incentive bonus and for long term incentive compensation, 40,635 LTIP Units in June 2023 to the Board of Directors for their annual retainers as compensation for their services as directors, 25,510 LTIP Units to an employee for his 2022 incentive bonus, his election to defer a portion of his 2023 annual salary and for long term incentive compensation and 3,304 LTIP Units to a consultant under the consultancy agreement with the Company.

As of June 30, 2023 and December 31, 2022, non-controlling interests consisted of 4,110,602 OP Units and 882,151 LTIP Units and 4,133,619 OP Units and 536,868 LTIP Units, respectively. This represented approximately 19.8% and 19.2% of the outstanding Operating Partnership units as of June 30, 2023 and December 31, 2022, respectively. OP Units and shares of Class A common stock generally have the same economic characteristics, as they share equally in the total net income or loss and distributions of the Operating Partnership. Beginning on or after the date which is 12 months after the date on which a person first became a holder of common units, each limited partner and assignees of limited partners will generally 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, shares of Class A common stock, on an one-for-one basis determined in accordance with and subject to adjustment under the partnership agreement.

During the six months ended June 30, 2023, 22,798 OP Units were redeemed for 22,798 shares of Class A common stock. For redemption of OP Units using shares of Class A common stock, the Company adjusted the carrying value of non-controlling interests to reflect its share of the book value of the Operating Partnership reflecting the change in the Company’s ownership of the Operating Partnership. Such adjustments are recorded to additional paid-in capital as a reallocation of non-controlling interest in the Consolidated Statements of Changes in Equity. During the six months ended June 30, 2023, 37,500 OP Units were also redeemed for cash for the total amount of $0.6 million.

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 Plan, the Company may grant equity incentive awards to its directors, officers, employees and consultants. As of June 30, 2023, the remaining shares available under the Plan for future issuance was 1,038,299. 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 the Company's outstanding restricted shares of Class A common stock, LTIP Units and RSUs. The balance as of June 30, 2023 represents unvested restricted shares of Class A common stock and LTIP Units and RSUs that are outstanding, whether vested or not:

	Restricted Shares (1)(2)	LTIP Units (3)	RSUs (4)	Total Shares/Units/RSUs	Weighted Average Grant Date Fair Value
Outstanding, as of January 1, 2023	449,076	536,868	229,500	1,215,444	$	16.12
Granted	123,801	345,283	110,968	580,052	$	15.56
Vesting of restricted shares and RSUs(5)	(56,940)	—	(27,456)	(84,396)	$	12.17
Forfeited	(5,004)	—	(11,216)	(16,220)	$	8.51
Outstanding, as of June 30, 2023	510,933	882,151	301,796	1,694,880	$	16.20

Explanatory Notes:    

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

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

(3)Includes 143,288 LTIP Units granted to the Company’s CEO, 75,489 LTIP Units granted to the Company’s president and 57,057 LTIP Units granted to the Company's Chief Financial Officer, which vest over three years or cliff vest at the end of eight years. Also includes 25,510 LTIP Units granted to an employee of the Company, a portion of which will vest on December 31, 2023 with the remaining to vest over three years or cliff vest at the end of eight years, 40,635 LTIP Units granted to the Company's independent directors that vest over three years or cliff vest at the end of three years and 3,304 LTIP Units granted to a consultant under the consultancy agreement with the Company that vested on June 30, 2023.

(4)Includes 63,512 RSUs granted to certain officers and employees of the Company during the six months ended June 30, 2023, 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 performance-based hurdles relating to the Company’s specified absolute and relative total stockholder return goals and continued employment with the Company over the approximately three-year period from the grant date through December 31, 2025. 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 46,258 time-based RSUs issued for 2022 incentive bonuses to certain employees that vested fully on January 31, 2023, the date of grant, and 1,197 time-based

RSUs granted to certain employees for their election to defer a portion of their 2023 salary that will vest on December 31, 2023. RSUs reflect the right to receive shares of Class A common stock, subject to the applicable vesting criteria.

(5)Includes 63,086 of restricted shares and RSUs that vested and 21,310 shares of restricted shares that were withheld to satisfy minimum statutory withholding requirements. 

During the year ended December 31, 2020, the Company issued 38,672 RSUs (the “2020 Performance-Based Awards”) to certain employees that were market-based awards and subject to the achievement of performance-based hurdles relating to the Company’s absolute total stockholder return goals and continued employment with the Company over the approximately three-year performance period ended December 31, 2022. In January 2023, the Company's Corporate Governance and Compensation Committee of the Board of Directors determined that the Company's total stockholder return for such three-year performance period exceeded the threshold performance hurdles for the 2020 Performance-Based Awards and, as a result, approved the payout of (i) 27,456 RSUs for such awards, which were settled using the Company’s shares of Class A common stock, and (ii) their cash dividends for the three-year performance period.

During the three and six months ended June 30, 2023, the Company recognized compensation expense of $1.2 million and $2.8 million, respectively, in “General and administrative expenses” and $0.1 million and $0.4 million, respectively, in "Property operating expenses" in the Consolidated Statements of Operations and Comprehensive Income related to all awards. During the three and six months ended June 30, 2022, the Company recognized compensation expense of $0.9 million and $2.4 million, respectively, in “General and administrative expenses” and $0.1 million and $0.3 million, respectively, in "Property operating expenses" in the Consolidated Statements of Operations and Comprehensive Income related to all awards.

As of June 30, 2023, there was $17.4 million of total unrecognized compensation cost related to unvested awards, which is expected to be recognized over a weighted average period of 5.25 years.

In July 2023, the Company issued 9,941 RSUs and 7,370 restricted shares of Class A common stock to certain employees for their elections to receive such RSUs and restricted shares in lieu of a portion of their 2023 annual salaries pursuant to the Company's Alignment of Interest Program. The RSUs issued to employees in lieu of salaries will cliff vest on December 31, 2023, while the other restricted shares of Class A common stock issued to employees in lieu of salaries will cliff vest on the fifth or eighth anniversary of July 1, 2023. In addition, in July 2023, the Company issued 5,143 LTIP Units to a consultant under the consultancy agreement with the Company.

Employee Stock Purchase Plan

The Company's ESPP allows its employees to purchase shares of the Class A common stock at a discount. A total of 100,000 shares of Class A common stock was reserved for sale and authorized for issuance under the ESPP. The Code permits the Company to provide up to a 15% discount on the lesser of the fair market value of such shares of Class A common stock at the beginning of the offering period and the close of the offering period. As of June 30, 2023 and December 31, 2022, 36,156 and 29,710 shares have been issued under the ESPP since commencement, respectively. During the three and six months ended June 30, 2023, the Company recognized compensation expense of $0.01 million and $0.02 million, respectively, related to the ESPP. During the three and six months ended June 30, 2022, the Company recognized compensation expense of $1,625 and $0.02 million, respectively, related to the ESPP.

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Commitments and Contingencies

6 Months Ended

Jun. 30, 2023

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

Commitments and Contingencies 

As of June 30, 2023, the Company was not involved in any litigation nor to its knowledge is any litigation threatened against the Company that, in management’s opinion, would result in any material adverse effect on the Company’s financial position and results of operations, 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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Business Acquisition

6 Months Ended

Jun. 30, 2023

Business Combination and Asset Acquisition [Abstract]

Business Acquisition

Business Acquisition

On March 4, 2022, the Company acquired a postal real estate consulting business and its employees through the issuance of 79,794 OP Units and $0.2 million in cash for an aggregate purchase price of approximately $1.7 million to complement the Company's core business of acquiring, managing, servicing and being a consolidator of postal properties.

In connection with the acquisition, the Company recorded an intangible asset related to the customer relationships and trade name of approximately $0.2 million in “Prepaid expenses and other assets, net” on the Consolidated Balance Sheets, which is being amortized over the estimated useful life of four years, and goodwill of approximately $1.5 million. The goodwill recorded is deductible for income tax purposes. All assets acquired in connection with the business acquisition were assigned to the Company’s single reportable segment. The results of operations of this acquired business have been included since the acquisition date. Pro forma information has not been presented for this business acquisition because such information is not material to the financial statements.

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Subsequent Events

6 Months Ended

Jun. 30, 2023

Subsequent Events [Abstract]

Subsequent Events

Subsequent Events

The Company's Board of Directors approved, and on July 26, 2023, the Company declared a second quarter common stock dividend of $0.2375 per share, which is payable on August 31, 2023 to stockholders of record as of August 7, 2023.

On July 24, 2023, the Company entered into the Second Amendment to the Credit Facilities. See Note 5. Debt for additional details. As of August 7, 2023, the Company had $190.0 million drawn on the Credit Facilities, with $75.0 million drawn on the 2021 Term Loan, $115.0 million drawn on the 2022 Term Loan and no amount drawn on the Revolving Credit Facility.

As of August 7, 2023 and during the period subsequent to June 30, 2023, the Company issued 514,997 shares of its Class A common stock under the ATM Program for gross proceeds of approximately $7.7 million and also entered into forward sales transactions under the ATM Program for the sale of an additional 798,847 shares of its Class A common stock for gross proceeds of approximately $12.0 million.

As of August 7, 2023 and during the period subsequent to June 30, 2023, the Company acquired 15 properties for approximately $6.2 million, excluding closing costs.

As of August 7, 2023 and during the period subsequent to June 30, 2023, the Company had entered into definitive agreements to acquire 15 properties for approximately $3.9 million. However, the Company can provide no assurances that the acquisitions of these properties will be consummated on the terms and timing the Company expects, or at all.

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Summary of Significant Accounting Policies (Policies)

6 Months Ended

Jun. 30, 2023

Accounting Policies [Abstract]

Basis of Presentation

Basis of Presentation

The accompanying unaudited Consolidated Financial Statements include the financial position and results of operations of the Company, the Operating Partnership and its wholly owned subsidiaries.

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. Substantially all of the assets and liabilities of the Company relate to the Operating Partnership.

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 reflects the income attributed to controlling and non-controlling interests.

The accompanying unaudited 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 Financial Statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022. 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, 2023. 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. As discussed in the Consolidated Financial Statements in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022, the Company’s most significant assumptions and estimates are related to the valuation of investments in real estate properties and impairment of long-lived assets. Although management believes its estimates are reasonable, actual results could differ from those estimates.

Offering and Other Costs

Offering and Other Costs

Offering costs are recorded in “Total Stockholders’ Equity” on the Consolidated Balance Sheets as a reduction of additional paid-in capital.

Deferred Costs

Deferred Costs

Financing costs related to the issuance of the Company’s long-term debt, including the term loan facility component of the Company's existing credit facilities (the "Credit Facilities"), are deferred and amortized as an increase to interest expense over the term of the related debt instrument using the straight-line method, which approximates the effective-interest rate method, and are reported as a reduction of the related debt balance on the Consolidated Balance Sheets. Deferred financing costs related to the revolving credit facility component (the "Revolving Credit Facility") of the Credit Facilities are deferred and amortized as an increase to interest expense over the terms of the Revolving Credit Facility and are included in “Prepaid expenses and other assets, net” on the Consolidated Balance Sheets.

Cash and Escrows and Reserves

Cash and Escrows and ReservesCash includes unrestricted cash with a maturity of three months or less. Escrows and reserves consist of restricted cash.

Revenue Recognition

Revenue Recognition

The Company has operating lease agreements with tenants, some of which contain provisions for future rental increases. Rental income is recognized on a straight-line basis over the term of the lease. In addition, certain lease agreements provide for reimbursements from tenants for real estate taxes and other recoverable costs, which are recorded on an accrual basis as part of “Rental income” in the Consolidated Statements of Operations and Comprehensive Income. The Company’s determination of the probability to collect lease payments is impacted by numerous factors, including the Company's assessment of the tenant’s creditworthiness, economic conditions, historical experience with the tenant, future prospects for the tenant and the length of the lease term. If leases currently classified as probable of collection are subsequently reclassified as not probable, any outstanding lease receivables (including straight-line rent receivables) would be written-off with a corresponding decrease in rental income.

Fee and other primarily consists of (i) property management fees, (ii) income recognized from properties accounted for as financing leases and (iii) fees earned from providing advisory services to third-party owners of postal properties.

The management fees arise from contractual agreements with entities that are affiliated with the Company’s CEO. Management fee income is recognized as earned under the respective agreements.

Revenue from direct financing leases is recognized over the lease term using the effective interest rate method. At lease inception, the Company records an asset within "Investment in financing leases, net" on the Consolidated Balance Sheets, which represents the Company’s net investment in the direct financing lease. This initial net investment is determined by aggregating the total future minimum lease payments attributable to the direct financing lease and the estimated residual value of the property, if any, less unearned income. Over the lease term, the investment in the direct financing lease is reduced and interest is recognized as revenue in “Fee and other” in the Consolidated Statements of Operations and Comprehensive Income and produces a constant periodic rate of return on the "Investment in financing leases, net".

Revenue from advisory services is generated from service contracts generally based on (i) time and expense arrangements (where the Company recognizes revenues based on hours incurred and contracted rates), (ii) fixed-fee arrangements (where the Company recognizes revenues earned to date by applying the proportional performance method) or (iii) performance-based or contingent arrangements (where the Company recognizes revenues at a point in time when the client receives the benefit of the promised service). Reimbursable expenses for the advisory services, including those relating to travel, out-of-pocket expenses, outside consultants and other outside service costs, are generally included in revenues and in general and administrative expenses in the period in which the expense is incurred.

Fair Value of Financial Instruments

Fair Value Measurements

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 have realized on disposition of the assets and liabilities as of June 30, 2023 and December 31, 2022. 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 and other assets (excluding derivatives), accounts payable and accrued expenses are carried at amounts which reasonably approximate their fair values as of June 30, 2023 and December 31, 2022 due to their short maturities.

The fair value of the Company’s borrowings under its Credit Facilities approximates carrying value because such borrowings are subject to a variable market rate, which reprices frequently. The fair value was determined using the Adjusted Term SOFR (as defined below) as of June 30, 2023 and December 31, 2022, plus an applicable spread under the Credit Facilities, a Level 2 classification in the fair value hierarchy. The fair value of the Company’s secured borrowings aggregated approximately $27.8 million and $27.5 million as compared to the principal balance of $33.0 million and $33.1 million as of June 30, 2023 and December 31, 2022, respectively. The fair value of the Company’s secured debt was categorized as a Level 3 fair value estimate (as provided by ASC 820, Fair Value Measurements and Disclosures). The fair value of the mortgage debt was determined by discounting the future contractual interest and principal payments by a market rate.

The Company's derivative assets and liabilities, comprised of interest rate swap derivative instruments entered into in connection with the Credit Facilities, are recorded at fair value based on a variety of observable inputs, including contractual terms, interest rate curves, yield curves, measure of volatility and correlations of such inputs. The Company measures its

derivatives at fair value on a recurring basis based on the expected amount of future cash flows on a discounted basis and incorporating a measure of non-performance risk. The fair value of the Company's derivative assets and liabilities was categorized as a Level 2 fair value estimate (as provided by ASC 820, Fair Value Measurements and Disclosures). The Company considers its own credit risk, as well as the credit risk of its counterparties, when evaluating the fair value of its derivative assets and liabilities. As of June 30, 2023 and December 31, 2022, the fair value of the Company’s interest rate swap derivative assets was approximately $9.8 million and $9.2 million, respectively, included in “Prepaid expenses and other assets, net” on the Consolidated Balance Sheets.

Disclosures about fair value of assets and liabilities are based on pertinent information available to management as of June 30, 2023 and December 31, 2022. 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, 2023 and current estimates of fair value may differ significantly from the amounts presented herein.

Derivative Instruments and Hedging Activities

Derivative Instruments and Hedging ActivitiesIn accordance with ASC 815, Derivatives and Hedging, the Company records all derivative instruments on the Consolidated Balance Sheets at fair value. The accounting for changes in the fair value of derivatives depends on the intended use of the derivative, whether the Company has elected to designate a derivative in a hedging relationship and apply hedge accounting and whether the hedging relationship has satisfied the criteria necessary to apply hedge accounting. Derivatives designated and qualifying as a hedge of the exposure to variability in expected future cash flows are considered cash flow hedges. Hedge accounting generally provides for the matching of the timing of gain or loss recognition on the hedging instrument with the recognition of the changes in the fair value of the hedged asset or liability that are attributable to the hedged risk in a fair value hedge or the earnings effect of the hedged forecasted transactions in a cash flow hedge. The Company may enter into derivative contracts that are intended to economically hedge certain of its risks, even though hedge accounting does not apply or the Company elects not to apply hedge accounting. See Note 6. Derivatives and Hedging Activities for further details.

Impairment

Impairment of Long-Lived AssetsThe 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.

Concentration of Credit Risks

Concentration of Credit Risks

As of June 30, 2023, the Company’s properties were leased primarily to a single tenant, the USPS. For the six months ended June 30, 2023, approximately 13.3% of the Company’s total rental income, or $3.9 million, was concentrated in Pennsylvania. For the six months ended June 30, 2022, approximately 16.1% of the Company's total rental income, or $3.8 million, was concentrated in Pennsylvania. The ability of the USPS to honor the terms of its leases is dependent upon regulatory, economic, environmental or competitive conditions in Pennsylvania or other regions where the Company operates in and could have a material effect on the Company’s overall business results.

The Company has deposited cash and maintains its bank deposits with large financial institutions in amounts that, from time to time, 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 records forfeitures as a reduction of equity-based compensation expense as such forfeitures 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 to 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.

Insurance Accounting

Insurance Accounting

The Company carries liability insurance to mitigate its exposure to certain losses, including those relating to property damage and business interruption. The Company records the estimated amount of expected insurance proceeds for property damage and other losses incurred as an asset (typically a receivable from the insurer) and income up to the amount of the losses incurred when the amount is determinable and approved by the insurance company. Any amount of insurance recovery in excess of the amount of the losses incurred is considered a gain contingency and is not recorded in other income until the amount is determinable and approved by the insurance company. Insurance recoveries for business interruption for lost revenue or profit are accounted for as gain contingencies in their entirety, and therefore are not recorded in income until the amount is determinable and approved by the insurance company.

Earnings per Share

Earnings per Share

The Company calculates earnings per share ("EPS") based upon the weighted average shares outstanding less issued and outstanding non-vested shares of Class A common stock. As of June 30, 2023 and 2022, the Company had unvested restricted shares of Class A common stock, long term incentive units of the Operating Partnership ("LTIP Units") and certain restricted stock units (“RSUs”), which provide for non-forfeitable rights to dividend and dividend equivalent payments. Accordingly, these unvested restricted shares of Class A common stock, LTIP Units and RSUs are considered participating securities and are included in the computation of basic and diluted EPS pursuant to the two-class method. Diluted EPS is calculated after giving effect to all potential dilutive shares outstanding during the period. See Note 10. Earnings Per Share for further details.

Recently Adopted and Future Application of Accounting Pronouncements

Recently Adopted Accounting Pronouncements

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 changed how entities measure credit losses for most financial assets and certain other instruments that are not measured at fair value through net income. The guidance replaced the previous "incurred loss" model with an "expected loss" approach. The guidance also requires entities to disclose information about how they developed the allowances, including changes in the factors that influenced 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 became effective for the Company and was adopted by the Company on January 1, 2023. Upon adoption of this guidance, the Company had two direct financing leases with a net investment balance aggregating approximately $16.1 million prior to any credit loss adjustment. Historically, the Company has had no collection issues related to these direct financing leases and its other leases in which the Company is the lessor; therefore, the Company assessed the probability of default on these leases based on the lessee’s status as an independent agency of the executive branch of the U.S. federal government, financial condition and business prospects and the remaining term of the leases. Based on the aforementioned, the Company did not recognize any credit loss adjustment for such leases.

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Summary of Significant Accounting Policies (Tables)

6 Months Ended

Jun. 30, 2023

Accounting Policies [Abstract]

Schedule of cash and escrows and reserves

The following table provides a reconciliation of cash and escrows and reserves reported within the Consolidated Balance Sheets and Consolidated Statements of Cash Flows:

	As of
	June 30, 2023		December 31, 2022
	(in thousands)
Cash	$	2,191	$	1,495
Escrows and reserves:
Maintenance reserve	260		206
Real estate tax reserve	384		240
ESPP reserve	107		101
Cash and escrows and reserves	$	2,942	$	2,042

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Real Estate Acquisitions (Tables)

6 Months Ended

Jun. 30, 2023

Real Estate [Abstract]

Schedule total purchase price including transaction costs

The total purchase price including transaction costs was allocated as follows (in thousands, except for the number of properties):

Three Months Ended		Number of Properties	Land		Building and Improvements		Tenant Improvements		In-place lease intangibles		Above- market leases		Below- market leases		Other		Total (1)
2023
March 31, 2023	(2)	39	$	2,802	$	14,271	$	152	$	1,134	$	43	$	(826)	$	—	$	17,576
June 30, 2023	(3)	39	$	3,241	$	12,054	$	117	$	1,066	$	24	$	(483)	$	—	$	16,019
Total		78	$	6,043	$	26,325	$	269	$	2,200	$	67	$	(1,309)	$	—	$	33,595

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Intangible Assets and Liabilities (Tables)

6 Months Ended

Jun. 30, 2023

Goodwill and Intangible Assets Disclosure [Abstract]

Schedule of finite-lived intangible assets and liabilities

The following table summarizes the Company’s intangible assets and liabilities:

As of	Gross Asset (Liability)		Accumulated Amortization		Net Carrying Amount
			(in thousands)
June 30, 2023:
In-place lease intangibles	$	42,274	$	(27,934)	$	14,340
Above-market leases	623		(238)		385
Below-market leases	(20,386)		8,511		(11,875)
December 31, 2022:
In-place lease intangibles	$	40,074	$	(24,387)	$	15,687
Above-market leases	556		(157)		399
Below-market leases	(19,077)		7,256		(11,821)

Schedule of future amortization

Future amortization/accretion of these intangibles is below (in thousands):

Year Ending December 31,	In-place lease intangibles		Above-market leases		Below-market leases
2023-Remaining	$	3,208	$	81	$	(1,233)
2024	5,085		124		(2,143)
2025	3,203		89		(1,566)
2026	1,837		67		(1,266)
2027	694		15		(990)
Thereafter	313		9		(4,677)
Total	$	14,340	$	385	$	(11,875)

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Debt (Tables)

6 Months Ended

Jun. 30, 2023

Debt Disclosure [Abstract]

Schedule of principal balances of mortgage loans payable

The following table summarizes the Company’s indebtedness as of June 30, 2023 and December 31, 2022 (dollars in thousands):

	Outstanding Balance as of June 30, 2023		Outstanding Balance as of December 31, 2022		Interest Rate at June 30, 2023		Maturity Date
Revolving Credit Facility(1)	$	29,000	$	—	SOFR+148 bps(2)		January 2026
2021 Term Loan(1)	50,000		50,000		SOFR+143 bps(2)		January 2027
2022 Term Loan(1)	115,000		115,000		SOFR+143 bps(2)		February 2028
Secured Borrowings:
Vision Bank(3)	1,409		1,409		3.69	%	September 2041
First Oklahoma Bank(4)	324		333		3.63	%	December 2037
Vision Bank – 2018(5)	844		844		3.69	%	September 2041
Seller Financing(6)	194		282		6.00	%	January 2025
AIG(7)	30,225		30,225		2.80	%	January 2031
Total Principal	226,996		198,093
Unamortized deferred financing costs	(1,287)		(1,431)
Total Debt	$	225,709	$	196,662

Explanatory Notes:

(1)On August 9, 2021, the Company entered into the Credit Facilities, which included the $150.0 million Revolving Credit Facility and the $50.0 million senior unsecured term loan facility (the "2021 Term Loan"). On May 11, 2022, the Company amended the Credit Facilities to, among other things, add a new $75.0 million senior unsecured delayed draw term loan facility (the "2022 Term Loan" and, together with the 2021 Term Loan, the "Term Loans"), replace the London Interbank Offered Rate with the Secured Overnight Financing Rate ("SOFR") as the benchmark interest rate and allow for a decrease in the applicable margin by 0.02% if the Company achieves certain sustainability targets. On December 6, 2022, the Company exercised $40.0 million of term loan accordion under the 2022 Term Loan. On July 24, 2023, the Company amended the Credit Facilities (the "Second Amendment") to, among other things, add a daily simple SOFR-based option to the term SOFR-based floating interest rate option as a benchmark rate for borrowings under the Credit Facilities and further exercised $25.0 million of term loan accordion under the 2021 Term Loan and, on a delayed-draw basis, $10.0 million of term loan accordion under the 2022 Term Loan.

The Credit Facilities include an accordion feature which permits the Company to borrow up to an additional $150.0 million under the Revolving Credit Facility, subject to customary terms and conditions. Subsequent to June 30, 2023, the accordion feature under the Term Loans has been fully exercised. The Revolving Credit Facility matures in January 2026, which may be extended for two six-month periods subject to customary conditions, the 2021 Term Loan matures in January 2027 and the 2022 Term Loan matures in February 2028. Borrowings under the Credit Facilities carry an interest rate of, (i) in the case of the Revolving Credit Facility, either a base rate plus a margin ranging from 0.5% to 1.0% per annum or Adjusted Term SOFR (as defined below) plus a margin ranging from 1.5% to 2.0% per annum, or (ii) in the case of the Term Loans, either a base rate plus a margin ranging from 0.45% to 0.95% per annum or Adjusted Term SOFR plus a margin ranging from 1.45% to 1.95% per annum, in each case depending on the Company's consolidated leverage ratio. With respect to the Revolving Credit Facility, the Company will pay, if the usage is equal to or less than 50%, an unused facility fee of 0.20% per annum, or if the usage is greater than 50%, an unused facility fee of 0.15% per annum, in each case on the average daily unused commitments under the Revolving Credit Facility. The Credit Facilities contain a number of customary financial and non-financial covenants.

During the three and six months ended June 30, 2023, the Company incurred $0.07 million and $0.1 million, respectively, and, during the three and six months ended June 30, 2022, the Company incurred $0.06 million and $0.1 million, respectively, of unused facility fees related to the Revolving Credit Facility. As of June 30, 2023, the Company was in compliance with all of the Credit Facilities’ debt covenants.

(2)Based upon the one-month Adjusted Term SOFR, which is SOFR plus a term SOFR adjustment of 0.10%, subject to a 0% floor (the “Adjusted Term SOFR”). Upon the Company's achievement of certain sustainability targets for 2022, the applicable margins for the Credit Facilities were reduced by 0.02% for the year ending December 31, 2023, which is reflected in the margins noted in the table above.

(3)Five properties are collateralized under this loan and Mr. Spodek also provided a personal guarantee of payment for 50% of the outstanding amount thereunder. The loan has a fixed interest rate of 3.69% for the first five years with interest payments only (ending in October 2026), then adjusting every subsequent five year period thereafter with principal and interest payments to the rate based on the five year weekly average yield on United States Treasury securities adjusted to a constant maturity of five years, as made available to the Board of Governors of the Federal Reserve System (the "Five-Year Treasury Rate"), plus a margin of 2.75%, with a minimum annual rate of 2.75%.

(4)The loan is collateralized by first mortgage liens on four properties and a personal guarantee of payment by Mr. Spodek. The loan has a fixed interest rate of 3.625% for the first five years (ending in August 2026), then adjusting annually thereafter to a variable annual rate of Wall Street Journal Prime Rate with a minimum annual rate of 3.625%.

(5)The loan is collateralized by first mortgage liens on one property and a personal guarantee of payment by Mr. Spodek. The loan has a fixed interest rate of 3.69% for the first five years with interest payments only (ending in October 2026), then adjusting every subsequent five year period thereafter with principal and interest payments to the rate based on the Five-Year Treasury Rate, plus a margin of 2.75%, with a minimum annual rate of 2.75%.

(6)In connection with the acquisition of a property, the Company obtained seller financing secured by the property in the amount of $0.4 million requiring five annual payments of principal and interest of $0.1 million with the first installment due on January 2, 2021 based on a 6.0% interest rate per annum through January 2, 2025.

(7)The loan is secured by a first mortgage lien on an industrial property located in Warrendale, Pennsylvania. The loan has a fixed interest rate of 2.80% with interest-only payments for the first five years and fixed payments of principal and interest thereafter based on a 30-year amortization schedule.

Schedule of principal payments of mortgage loans payable

The scheduled principal repayments of indebtedness as of June 30, 2023 are as follows (in thousands):

Year Ending December 31,	Amount
2023 - Remaining	$	9
2024	112
2025	118
2026	29,636
2027	50,774
Thereafter	146,347
Total	$	226,996

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Derivatives and Hedging Activities (Tables)

6 Months Ended

Jun. 30, 2023

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Schedule of Interest Rate Swap

The table below presents the effect of the Company’s interest rate swap derivative instruments in the Consolidated Statements of Operations and Comprehensive Income for the three and six months ended June 30, 2023 and 2022 (in thousands):

	For the Three Months Ended June 30,				For the Six Months Ended June 30,
Derivatives in Cash Flow Hedging Relationships (Interest Rate Swaps)	2023		2022		2023		2022
Amount of (loss) gain recognized on derivative in "Accumulated other comprehensive income"	$	4,491	$	375	$	2,553	$	2,801
Amount of gain (loss) reclassified from "Accumulated other comprehensive income" into interest expense	$	1,092	$	(129)	$	1,991	$	(214)

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Leases (Tables)

6 Months Ended

Jun. 30, 2023

Leases, Operating [Abstract]

Schedule of rental revenue recognized for operating leases

The following table represents rental revenue that the Company recognized related to its operating leases (in thousands):

	For the Three Months Ended June 30,				For the Six Months Ended June 30,
	2023		2022		2023		2022
Fixed payments	$	12,854	$	10,482	$	25,404	$	20,146
Variable payments	1,908		1,653		3,857		3,338
	$	14,762	$	12,135	$	29,261	$	23,484

Schedule of future operating lease payments to be received

Future minimum lease payments to be received as of June 30, 2023 under non-cancellable operating leases for the next five years and thereafter are as follows (in thousands):

Year Ending December 31,	Amount (1)(2)
2023 - Remaining	$	21,551
2024	40,391
2025	33,838
2026	25,414
2027	14,190
Thereafter	15,716
Total	$	151,100

Explanatory Notes:

(1)The above minimum lease payments to be received do not include reimbursements from tenants for real estate taxes and other reimbursed expenses.

(2)As of June 30, 2023, the leases at 115 of the Company's properties were expired, and the USPS was occupying such properties as a holdover tenant. As such, the above minimum lease payments to be received do not include payments under these holdover leases. Holdover rent is typically paid as the greater of estimated market rent or the rent amount due under the expired lease.

Schedule of net investment in financing lease

The components of the Company’s net investment in financing leases as of June 30, 2023 and December 31, 2022 are summarized in the table below (in thousands):

	As of June 30, 2023		As of December 31, 2022
Total minimum lease payment receivable	$	32,646	$	33,215
Less: unearned income	(16,563)		(17,085)
Investment in financing leases, net	$	16,083	$	16,130

Schedule of future lease payments under direct financing lease

Future lease payments to be received under the Company’s direct financing leases as of June 30, 2023 for the next five years and thereafter are as follows (in thousands):

Year Ending December 31,	Amount
2023 – Remaining	$	568
2024	1,137
2025	1,137
2026	1,137
2027	1,137
Thereafter	27,530
Total	$	32,646

Schedule of prepaid expenses and other assets and accounts payable and accrued expenses

Operating right-of-use ("ROU") assets and lease liabilities are included in “Prepaid expenses and other assets, net” and “Accounts payable, accrued expense and other, net” on the Consolidated Balance Sheets as follows (in thousands):

	As of June 30, 2023		As of December 31, 2022
ROU asset – operating leases	$	908	$	1,010
Lease liability – operating leases	$	914	$	1,014

Schedule of future minimum lease payments

Future minimum lease payments to be paid by the Company as a lessee for operating leases as of June 30, 2023 for the next five years and thereafter are as follows (in thousands):

2023 — Remaining	$	124
2024	121
2025	46
2026	43
2027	43
Thereafter	1,387
Total future minimum lease payments	1,764
Interest discount	(850)
Total	$	914

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Earnings Per Share (Tables)

6 Months Ended

Jun. 30, 2023

Earnings Per Share [Abstract]

Schedule of reconciliation of income (loss) from operations

The following table presents a reconciliation of income from operations used in the basic and diluted EPS calculations (dollars in thousands, except share and per share data).

	For the Three Months Ended June 30,				For the Six Months Ended June 30,
	2023		2022		2023		2022
Numerator for earnings per share – basic and diluted:
Net income attributable to common stockholders	$	1,012	$	953	$	1,360	$	1,548
Less: Income attributable to participating securities	(346)		(241)		(652)		(470)
Numerator for earnings per share — basic and diluted	$	666	$	712	$	708	$	1,078
Denominator for earnings per share – basic and diluted (1)	19,544,833		18,398,808		19,417,304		18,383,544
Basic and diluted earnings per share	$	0.03	$	0.04	$	0.04	$	0.06

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Stockholder's Equity (Tables)

6 Months Ended

Jun. 30, 2023

Stockholders' Equity Note [Abstract]

Schedule of activity under ATM Program

As of June 30, 2023, the Company had approximately $37.0 million remaining that may be issued under the ATM Program.

	Three Months Ended June 30, 2023		Six Months Ended June 30, 2023
Shares issued	265,225		320,307
Gross proceeds	$	3,996	$	4,823
Fees and issuance costs	(153)		(270)
Net proceeds received	$	3,843	$	4,553
Average gross sales price per share	$	15.07	$	15.06

Schedule of declared and paid dividends

During the three and six months ended June 30, 2023, the Company's Board of Directors approved and the Company declared and paid dividends of $5.9 million and $11.8 million, respectively, to Class A common stockholders, Voting Equivalency stockholders, OP unitholders and LTIP unitholders, or $0.2375 per share or unit and $0.475 per share or unit, respectively, as shown in the table below.

Declaration Date	Record Date	Date Paid	Amount Per Share or Unit
February 1, 2023	February 15, 2023	February 28, 2023	$	0.2375
April 24, 2023	May 5, 2023	May 31, 2023	$	0.2375

Schedule of unvested shares of restricted stock

The following table presents a summary of the Company's outstanding restricted shares of Class A common stock, LTIP Units and RSUs. The balance as of June 30, 2023 represents unvested restricted shares of Class A common stock and LTIP Units and RSUs that are outstanding, whether vested or not:

	Restricted Shares (1)(2)	LTIP Units (3)	RSUs (4)	Total Shares/Units/RSUs	Weighted Average Grant Date Fair Value
Outstanding, as of January 1, 2023	449,076	536,868	229,500	1,215,444	$	16.12
Granted	123,801	345,283	110,968	580,052	$	15.56
Vesting of restricted shares and RSUs(5)	(56,940)	—	(27,456)	(84,396)	$	12.17
Forfeited	(5,004)	—	(11,216)	(16,220)	$	8.51
Outstanding, as of June 30, 2023	510,933	882,151	301,796	1,694,880	$	16.20

Explanatory Notes:    

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

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

(3)Includes 143,288 LTIP Units granted to the Company’s CEO, 75,489 LTIP Units granted to the Company’s president and 57,057 LTIP Units granted to the Company's Chief Financial Officer, which vest over three years or cliff vest at the end of eight years. Also includes 25,510 LTIP Units granted to an employee of the Company, a portion of which will vest on December 31, 2023 with the remaining to vest over three years or cliff vest at the end of eight years, 40,635 LTIP Units granted to the Company's independent directors that vest over three years or cliff vest at the end of three years and 3,304 LTIP Units granted to a consultant under the consultancy agreement with the Company that vested on June 30, 2023.

(4)Includes 63,512 RSUs granted to certain officers and employees of the Company during the six months ended June 30, 2023, 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 performance-based hurdles relating to the Company’s specified absolute and relative total stockholder return goals and continued employment with the Company over the approximately three-year period from the grant date through December 31, 2025. 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 46,258 time-based RSUs issued for 2022 incentive bonuses to certain employees that vested fully on January 31, 2023, the date of grant, and 1,197 time-based

RSUs granted to certain employees for their election to defer a portion of their 2023 salary that will vest on December 31, 2023. RSUs reflect the right to receive shares of Class A common stock, subject to the applicable vesting criteria.(5)Includes 63,086 of restricted shares and RSUs that vested and 21,310 shares of restricted shares that were withheld to satisfy minimum statutory withholding requirements.

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Organization and Description of Business - Narrative (Details)	Jun. 30, 2023 territory state property $ / shares shares	Dec. 31, 2022 $ / shares shares	May 17, 2019 $ / shares	May 15, 2019 $ / shares shares
Organization and Description of Business (Details) [Line Items]
Percentage of interest in operating partnership	80.20%
Class A common stock
Organization and Description of Business (Details) [Line Items]
Common stock, par value (in dollars per share) | $ / shares	$ 0.01	$ 0.01
Common stock, shares authorized (in shares)	500,000,000	500,000,000
Common stock, shares issued (in shares)	20,002,769	19,528,066
Class B common stock
Organization and Description of Business (Details) [Line Items]
Common stock, par value (in dollars per share) | $ / shares	$ 0.01	$ 0.01
Common stock, shares authorized (in shares)	27,206	27,206
Common stock, shares issued (in shares)	27,206	27,206
USPS
Organization and Description of Business (Details) [Line Items]
Number of postal properties (in properties) | property	1,364
Number of states (in states) | state	49
Number of territories (in territories) | territory	1
PRM
Organization and Description of Business (Details) [Line Items]
Number of postal properties (in properties) | property	397
IPO
Organization and Description of Business (Details) [Line Items]
Common stock, par value (in dollars per share) | $ / shares			$ 0.01	$ 0.01
Preferred stock, shares authorized (in shares)				100,000,000
IPO | Class A common stock
Organization and Description of Business (Details) [Line Items]
Common stock, shares authorized (in shares)				500,000,000
IPO | Class B common stock
Organization and Description of Business (Details) [Line Items]
Common stock, shares issued (in shares)				27,206

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Summary of Significant Accounting Policies - Narrative (Details)	3 Months Ended		6 Months Ended
	Jun. 30, 2023 USD ($)	Jun. 30, 2022 USD ($)	Jun. 30, 2023 USD ($)	Jun. 30, 2022 USD ($)	Dec. 31, 2022 USD ($) lease
Organization and Description of Business [Line Items]
Fair value	$ 27,800,000		$ 27,800,000		$ 27,500,000
Principal balance	33,000,000		33,000,000		33,100,000
Impairment	0	$ 0	0	$ 0
Rental income	14,762,000	$ 12,135,000	29,261,000	$ 23,484,000
Operating lease liability	914,000		914,000
ROU asset – operating leases	908,000		908,000		$ 1,010,000
Number of direct financing leases | lease					2
Investment in financing leases, net	16,083,000		16,083,000		$ 16,130,000
Interest Rate Swap | Fair Value, Inputs, Level 2
Organization and Description of Business [Line Items]
Fair value, hedging instrument	$ 9,800,000		$ 9,800,000		$ 9,200,000
Geographic Concentration Risk | Revenue Benchmark | PENNSYLVANIA
Organization and Description of Business [Line Items]
Concentration risk, percentage			13.30%	16.10%
Rental income			$ 3,900,000	$ 3,800,000

XML

Summary of Significant Accounting Policies - Schedule of cash and escrows and reserves (Details) - USD ($) $ in Thousands	Jun. 30, 2023	Dec. 31, 2022
Accounting Policies [Abstract]
Cash	$ 2,191	$ 1,495
Escrows and reserves:
Maintenance reserve	260	206
Real estate tax reserve	384	240
ESPP reserve	107	101
Cash and escrows and reserves	$ 2,942	$ 2,042

XML

Real Estate Acquisitions - Schedule total purchase price including transaction costs (Details) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2023 USD ($) property	Mar. 31, 2023 USD ($) property	Jun. 30, 2023 USD ($) property
Business Acquisition [Line Items]
Number of properties (in properties) | property	39	39	78
Total purchase price	$ 16,019	$ 17,576	$ 33,595
Land
Business Acquisition [Line Items]
Total purchase price	3,241	2,802	6,043
Building and Improvements
Business Acquisition [Line Items]
Total purchase price	12,054	14,271	26,325
Tenant Improvements
Business Acquisition [Line Items]
Total purchase price	117	152	269
In-place lease intangibles
Business Acquisition [Line Items]
Total purchase price	1,066	1,134	2,200
Above- market leases
Business Acquisition [Line Items]
Total purchase price	24	43	67
Below- market leases
Business Acquisition [Line Items]
Total purchase price	(483)	(826)	(1,309)
Other
Business Acquisition [Line Items]
Total purchase price	$ 0	$ 0	$ 0

XML

Real Estate Acquisitions - Narrative (Details) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2023 USD ($) property	Mar. 31, 2023 USD ($) property	Jun. 30, 2023 USD ($) property
Real Estate [Line Items]
Total purchase price	$ 16,019	$ 17,576	$ 33,595
Number of properties (in properties) | property	39	39	78
Acquisition closing costs	$ 200	$ 300
Class A common stock
Real Estate [Line Items]
Number of acquired postal properties (in properties) | property	39	39	39
Total purchase price	$ 16,000	$ 17,600
Acquisition closing costs	$ 500

XML

Intangible Assets and Liabilities - Schedule of intangible assets and liabilities (Details) - USD ($) $ in Thousands	Jun. 30, 2023	Dec. 31, 2022
Intangible Assets and Liabilities (Details) - Schedule of intangible assets and liabilities [Line Items]
Gross Asset (Liability)	$ (20,386)	$ (19,077)
Accumulated Amortization	8,511	7,256
Total	14,340	15,687
Total	(11,875)	(11,821)
In-place lease intangibles
Intangible Assets and Liabilities (Details) - Schedule of intangible assets and liabilities [Line Items]
Gross Asset (Liability)	42,274	40,074
Accumulated Amortization	(27,934)	(24,387)
Total	14,340	15,687
Above-market leases
Intangible Assets and Liabilities (Details) - Schedule of intangible assets and liabilities [Line Items]
Gross Asset (Liability)	623	556
Accumulated Amortization	(238)	(157)
Total	$ 385	$ 399

XML

Intangible Assets and Liabilities - Narrative (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Goodwill and Intangible Assets Disclosure [Abstract]
Amortization of in-place lease intangibles	$ 1,800	$ 1,700	$ 3,500	$ 3,500
Amortization of acquired above market leases	40	20	80	40
Amortization of acquired below market leases	$ 600	$ 500	$ 1,300	$ 1,100

XML

Intangible Assets and Liabilities - Schedule of future amortization (Details) - USD ($) $ in Thousands	Jun. 30, 2023	Dec. 31, 2022
Intangible Assets and Liabilities (Details) - Schedule of future amortization [Line Items]
Total	$ 14,340	$ 15,687
2022 - Remaining	(1,233)
2023	(2,143)
2024	(1,566)
2025	(1,266)
2026	(990)
Thereafter	(4,677)
Total	(11,875)	(11,821)
In-place lease intangibles
Intangible Assets and Liabilities (Details) - Schedule of future amortization [Line Items]
2022-Remaining	3,208
2023	5,085
2024	3,203
2025	1,837
2026	694
Thereafter	313
Total	14,340	15,687
Above-market leases
Intangible Assets and Liabilities (Details) - Schedule of future amortization [Line Items]
2022-Remaining	81
2023	124
2024	89
2025	67
2026	15
Thereafter	9
Total	$ 385	$ 399

XML

Debt - Schedule of principal balances of mortgage loans payable (Details) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2023	Dec. 31, 2022	Jul. 23, 2021
Debt Instrument [Line Items]
Outstanding balance	$ 226,996	$ 198,093
Unamortized deferred financing costs	(1,287)	(1,431)
Total Debt	$ 225,709	196,662
Loan
Debt Instrument [Line Items]
Interest rate	2.80%
Revolving Credit Facility(1) | Revolving credit facility | Line of credit
Debt Instrument [Line Items]
Outstanding balance	$ 29,000	0
Revolving Credit Facility(1) | Revolving credit facility | Line of credit | LIBOR
Debt Instrument [Line Items]
Basis spread on variable rate	1.48%
2021 Credit Facility | Unsecured debt | Line of credit
Debt Instrument [Line Items]
Outstanding balance	$ 50,000	50,000
2021 Credit Facility | Unsecured debt | Line of credit | LIBOR
Debt Instrument [Line Items]
Basis spread on variable rate	1.43%
Vision Bank | Loan
Debt Instrument [Line Items]
Outstanding balance	$ 1,409	1,409
Interest rate	3.69%
First Oklahoma Bank loan
Debt Instrument [Line Items]
Interest rate			3.625%
First Oklahoma Bank loan | Loan
Debt Instrument [Line Items]
Outstanding balance	$ 324	333
Interest rate	3.63%
Vision Bank – 2018 | Loan
Debt Instrument [Line Items]
Outstanding balance	$ 844	844
Interest rate	3.69%
Seller Financing | Loan
Debt Instrument [Line Items]
Outstanding balance	$ 194	282
Interest rate	6.00%
AIG – December 2020 | Loan
Debt Instrument [Line Items]
Outstanding balance	$ 30,225	30,225
Interest rate	2.80%
2022 Credit Facility | Unsecured debt | Line of credit
Debt Instrument [Line Items]
Outstanding balance	$ 115,000	$ 115,000
Total Debt	$ 50,000

XML

Debt - Narrative (Details) $ in Thousands					3 Months Ended		6 Months Ended		12 Months Ended
	May 11, 2022 USD ($)	Sep. 30, 2021	Aug. 09, 2021 USD ($) option	Jul. 23, 2021	Jun. 30, 2023 USD ($) payment	Jun. 30, 2022 USD ($)	Jun. 30, 2023 USD ($) property payment	Jun. 30, 2022 USD ($)	Dec. 31, 2022 USD ($)
Debt (Details) [Line Items]
Weighted average maturity date for secured borrowing							4 years 8 months 12 days		5 years 6 months
Loan
Debt (Details) [Line Items]
Interest rate					2.80%		2.80%
Fixed interest period							5 years
Remaining discount amortization period							30 years
2021 Credit Facility | Revolving credit facility | Line of credit
Debt (Details) [Line Items]
Maximum borrowing facility			$ 150,000
Accordion feature			$ 150,000
Number of options to extend (in options) | option			2
Extension period			6 months
2021 Credit Facility | Revolving credit facility | Line of credit | Commitment fee threshold one
Debt (Details) [Line Items]
Capacity used (as a percentage)			0.50
Unused facility fee (as a percentage)			0.20%
2021 Credit Facility | Revolving credit facility | Line of credit | Commitment fee threshold two
Debt (Details) [Line Items]
Capacity used (as a percentage)			0.50
Unused facility fee (as a percentage)			0.15%
2021 Credit Facility | Unsecured debt | Line of credit
Debt (Details) [Line Items]
Total Principal			$ 50,000
Accordion feature					$ 50,000		$ 50,000
2021 Credit Facility | Base Rate | Revolving credit facility | Line of credit | Minimum
Debt (Details) [Line Items]
Basis spread on variable rate	0.50%
2021 Credit Facility | Base Rate | Revolving credit facility | Line of credit | Maximum
Debt (Details) [Line Items]
Basis spread on variable rate	1.00%
2021 Credit Facility | Base Rate | Unsecured debt | Line of credit | Minimum
Debt (Details) [Line Items]
Basis spread on variable rate	0.45%
2021 Credit Facility | Base Rate | Unsecured debt | Line of credit | Maximum
Debt (Details) [Line Items]
Basis spread on variable rate	0.95%
2021 Credit Facility | SOFR | Revolving credit facility | Line of credit
Debt (Details) [Line Items]
Decrease in margin	(0.0002)
2021 Credit Facility | SOFR | Revolving credit facility | Line of credit | Minimum
Debt (Details) [Line Items]
Basis spread on variable rate	1.50%
2021 Credit Facility | SOFR | Revolving credit facility | Line of credit | Maximum
Debt (Details) [Line Items]
Basis spread on variable rate	2.00%
2021 Credit Facility | SOFR | Unsecured debt | Line of credit
Debt (Details) [Line Items]
Variable rate adjustment	0.0010
Variable rate floor	0
2021 Credit Facility | LIBOR | Unsecured debt | Line of credit
Debt (Details) [Line Items]
Basis spread on variable rate							1.43%
2021 Credit Facility | LIBOR | Unsecured debt | Line of credit | Minimum
Debt (Details) [Line Items]
Basis spread on variable rate	1.45%
2021 Credit Facility | LIBOR | Unsecured debt | Line of credit | Maximum
Debt (Details) [Line Items]
Basis spread on variable rate	1.95%
2019 and 2021 Revolving Credit Facility | Revolving credit facility | Line of credit
Debt (Details) [Line Items]
Unused facility fee					$ 70	$ 60	$ 100	$ 100
Vision Bank | Loan
Debt (Details) [Line Items]
Interest rate					3.69%		3.69%
Percentage collateralized under loan					50.00%		50.00%
Fixed interest rate period							5 years
Number of properties collateralized under loan (in properties) | property							5
Vision Bank | Loan | Minimum
Debt (Details) [Line Items]
Minimum annual rate					2.75%		2.75%
Vision Bank | US Treasury (UST) Interest Rate | Loan
Debt (Details) [Line Items]
Basis spread on variable rate		2.75%
First Oklahoma Bank loan
Debt (Details) [Line Items]
Interest rate				3.625%
Fixed interest rate period				5 years
First Oklahoma Bank loan | Loan
Debt (Details) [Line Items]
Interest rate					3.63%		3.63%
Number of properties collateralized under loan (in properties) | property							4
First Oklahoma Bank loan | Prime Rate | Minimum
Debt (Details) [Line Items]
Interest rate				3.625%
Vision Bank – 2018
Debt (Details) [Line Items]
Fixed interest rate period							5 years
Minimum annual rate					2.75%		2.75%
Vision Bank – 2018 | Loan
Debt (Details) [Line Items]
Interest rate					3.69%		3.69%
Number of properties collateralized under loan (in properties) | property							1
Vision Bank – 2018 | US Treasury (UST) Interest Rate
Debt (Details) [Line Items]
Basis spread on variable rate		2.75%
Seller Financing | Loan
Debt (Details) [Line Items]
Interest rate					6.00%		6.00%
Collateral amount					$ 400		$ 400
Number of annual principal payments (in payments) | payment					5		5
Periodic payment							$ 100
First Amended Credit Facility | Unsecured debt | Line of credit
Debt (Details) [Line Items]
Maximum borrowing facility	$ 75,000
Accordion feature									$ 40,000

XML

Debt - Schedule of Principal payments of mortgage loans payable (Details) - USD ($) $ in Thousands	Jun. 30, 2023	Dec. 31, 2022
Debt Disclosure [Abstract]
2022 - Remaining	$ 9
2023	112
2024	118
2025	29,636
2026	50,774
Thereafter	146,347
Total	$ 226,996	$ 198,093

XML

Derivatives and Hedging Activities - Narrative (Details) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2023 USD ($) swap	Jun. 30, 2022 USD ($)	Jun. 30, 2023 USD ($) swap	Jun. 30, 2022 USD ($)	Aug. 07, 2023 USD ($)	Jul. 24, 2023 USD ($)	Dec. 31, 2022 USD ($)
Derivative [Line Items]
Outstanding balance	$ 226,996		$ 226,996				$ 198,093
Outstanding loan	225,709		225,709				196,662
Additional reclassified amount	4,700		4,700
Interest expense, net	$ (2,466)	$ (1,265)	$ (4,676)	$ (2,080)
Loan
Derivative [Line Items]
Interest rate	2.80%		2.80%
2021 Credit Facility | Line of credit | Subsequent event
Derivative [Line Items]
Outstanding loan					$ 190,000
2021 Credit Facility | Line of credit | Unsecured debt
Derivative [Line Items]
Accordion feature	$ 50,000		$ 50,000
Outstanding balance	$ 50,000		$ 50,000				50,000
2021 Credit Facility | Line of credit | Unsecured debt | Subsequent event
Derivative [Line Items]
Line of Credit Facility, Accordion Feature, Excercised						$ 25,000
2021 Term Loan | Loan
Derivative [Line Items]
Interest rate	2.27%		2.27%
2022 Credit Facility | Line of credit | Unsecured debt
Derivative [Line Items]
Outstanding balance	$ 115,000		$ 115,000				$ 115,000
Outstanding loan	$ 50,000		$ 50,000
2022 Term Loan | Line of credit | Unsecured debt | Subsequent event
Derivative [Line Items]
Outstanding loan					$ 115,000
2022 Term Loan | Loan
Derivative [Line Items]
Interest rate	4.217%		4.217%
2028 Term Loan | Loan
Derivative [Line Items]
Interest rate	4.79%		4.79%
Interest Rate Swap | Subsequent event
Derivative [Line Items]
Total notional amount						$ 25,000
Derivative, Fixed Interest Rate						5.736%
Interest Rate Swap | Line of credit | Unsecured debt
Derivative [Line Items]
Total notional amount	$ 165,000		$ 165,000
Interest Rate Swap
Derivative [Line Items]
Total notional amount	$ 25,000		$ 25,000
Interest Rate Swap | Cash Flow Hedging
Derivative [Line Items]
Number of interest rate swaps (in swaps) | swap	5		5
Interest Rate Swap, Forty Million Principle Of Term Loan
Derivative [Line Items]
Total notional amount	$ 40,000		$ 40,000
Interest rate	4.932%		4.932%

XML

Derivatives and Hedging Activities - Interest Rate Swap (Details) - Interest Rate Swap - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Derivative [Line Items]
Amount of (loss) gain recognized on derivative in "Accumulated other comprehensive income"	$ 4,491	$ 375	$ 2,553	$ 2,801
Amount of gain (loss) reclassified from "Accumulated other comprehensive income" into interest expense	$ 1,092	$ (129)	$ 1,991	$ (214)

XML

Leases - Narrative (Details) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2023 USD ($)	Jun. 30, 2022 USD ($)	Jun. 30, 2023 USD ($)	Jun. 30, 2022 USD ($)	Jun. 30, 2023 lease	Jun. 30, 2023 property	Jun. 30, 2023 USD ($)	Jun. 30, 2023	Dec. 31, 2022 USD ($) property
Operating Leased Assets [Line Items]
Number of postal properties subject to direct financing leases (in properties)					2	2			2
Number of operating leases (in properties) | property						67
Number of leases acquired with purchase price greater than value of underlying asset (in properties) | property						64
Aggregate carrying value							$ 49,200
Aggregate purchase price							61,900
Number of operating leases not acquired (in properties) | property						3
Purchase price for postal properties							2,600
Direct financing lease revenue	$ 300	$ 300	$ 500
ROU asset – operating leases							908		$ 1,010
Lease liability – operating leases							$ 914
Weighted average remaining lease term	22 years 1 month 6 days		22 years 1 month 6 days
Operating lease expense	$ 60	$ 60	$ 100	$ 100
Minimum
Operating Leased Assets [Line Items]
Remaining lease term	1 year		1 year
Weighted average discount rate								4.25%
Maximum
Operating Leased Assets [Line Items]
Remaining lease term	56 years		56 years
Weighted average discount rate								6.37%

XML

Leases - Schedule of rental revenue related to its operating leases (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Leases, Operating [Abstract]
Fixed payments	$ 12,854	$ 10,482	$ 25,404	$ 20,146
Variable payments	1,908	1,653	3,857	3,338
Total	$ 14,762	$ 12,135	$ 29,261	$ 23,484

XML

Leases - Schedule of future minimum lease payments (Details) $ in Thousands	Jun. 30, 2023 USD ($) property
Leases, Operating [Abstract]
2022 – Remaining	$ 21,551
2023	40,391
2024	33,838
2025	25,414
2026	14,190
Thereafter	15,716
Total	$ 151,100
Number of expired leases (in leases) | property	115

XML

Leases - Schedule of direct financing lease (Details) - USD ($) $ in Thousands	Jun. 30, 2023	Dec. 31, 2022
Leases, Operating [Abstract]
Total	$ 32,646	$ 33,215
Less: unearned income	(16,563)	(17,085)
Investment in financing leases, net	$ 16,083	$ 16,130

XML

Leases - Schedule of future lease payments (Details) - USD ($) $ in Thousands	Jun. 30, 2023	Dec. 31, 2022
Leases, Operating [Abstract]
2022 – Remaining	$ 568
2023	1,137
2024	1,137
2025	1,137
2026	1,137
Thereafter	27,530
Total	$ 32,646	$ 33,215

XML

Leases - Schedule of prepaid expenses and other assets and accounts payable and accrued expenses (Details) - USD ($) $ in Thousands	Jun. 30, 2023	Dec. 31, 2022
Leases, Operating [Abstract]
Operating Lease, Right-of-Use Asset, Statement of Financial Position [Extensible Enumeration]	Prepaid expenses and other assets, net	Prepaid expenses and other assets, net
ROU asset – operating leases	$ 908	$ 1,010
Operating Lease, Liability, Statement of Financial Position [Extensible Enumeration]	Accounts payable, accrued expenses and other, net	Accounts payable, accrued expenses and other, net
Lease liability – operating leases	$ 914	$ 1,014

XML

Leases - Schedule of future minimum lease payments (Details) $ in Thousands	Jun. 30, 2023 USD ($)
Leases, Operating [Abstract]
2022 - Remaining	$ 124
2023	121
2024	46
2025	43
2026	43
Thereafter	1,387
Total future minimum lease payments	1,764
Interest discount	(850)
Total	$ 914

XML

Income Taxes - Narrative (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022	Dec. 31, 2022
Income Tax Contingency [Line Items]
Income tax expense	$ 21	$ 18	$ 37	$ 29
Unrecognized tax benefits					$ 20
Reduction resulting from expiration of statute of limitations			20
PRM
Income Tax Contingency [Line Items]
Income tax expense	$ 10	$ 20	$ 30	$ 30

XML

Related Party Transactions - Narrative (Details) - USD ($) $ in Thousands		3 Months Ended		6 Months Ended		12 Months Ended
	May 17, 2019	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022	Dec. 31, 2022
Related Party Transactions (Details) [Line Items]
Monthly rent amount	$ 15
Lease term	5 years
General and administrative expenses		$ 50	$ 50	$ 100	$ 100
Outstanding loan		$ 225,709		$ 225,709		$ 196,662
ATM Program
Related Party Transactions (Details) [Line Items]
Shares issued		265,225	0	320,307	0	751,382
First Oklahoma Bank loan | Loan | Affiliated entity | Andrew Spodek, Chief Executive Officer
Related Party Transactions (Details) [Line Items]
Outstanding loan		$ 1,900		$ 1,900		$ 1,900
PRM
Related Party Transactions (Details) [Line Items]
Management fee income		300		600
Accrued management fees receivable		$ 300		$ 300		$ 300

XML

Earnings Per Share - Schedule of reconciliation of income (loss) from operations (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Numerator for earnings per share – basic and diluted:
Net income attributable to common stockholders	$ 1,012	$ 953	$ 1,360	$ 1,548
Less: Income attributable to participating securities	(346)	(241)	(652)	(470)
Less: Income attributable to participating securities	(346)	(241)	(652)	(470)
Net income attributable to common stockholders	666	712	708	1,078
Numerator for earnings per share - diluted	$ 666	$ 712	$ 708	$ 1,078
Denominator:
Denominator for earnings per share – basic (in shares)	19,544,833	18,398,808	19,417,304	18,383,544
Denominator for earnings per shared - diluted (in shares)	19,544,833	18,398,808	19,417,304	18,383,544
Basic earnings per share (in dollars per share)
Basic earnings per share (in dollars per share)	$ 0.03	$ 0.04	$ 0.04	$ 0.06
Diluted earnings per share (in dollars per share)	$ 0.03	$ 0.04	$ 0.04	$ 0.06

XML

Stockholder's Equity - Narrative (Details)					1 Months Ended					3 Months Ended			6 Months Ended		12 Months Ended
	Aug. 07, 2023 shares	Jul. 26, 2023 $ / shares	Jul. 05, 2022 shares	Dec. 14, 2020 USD ($)	Jul. 31, 2023 shares	Jun. 30, 2023 USD ($) shares	Jan. 31, 2023 shares	Jun. 30, 2022 shares	Jan. 31, 2022 shares	Jun. 30, 2023 USD ($) shares	Jun. 30, 2022 USD ($) shares	Mar. 31, 2021 shares	Jun. 30, 2023 USD ($) shares	Jun. 30, 2022 USD ($) shares	Dec. 31, 2022 shares	May 24, 2023 $ / shares	Feb. 01, 2023 $ / shares
Stockholder's Equity (Details) [Line Items]
Gross proceeds | $													$ 4,561,000	$ 0
Outstanding operating partnership percentage						19.80%				19.80%			19.80%		19.20%
Remaining shares available for issuance (in shares)						1,038,299				1,038,299			1,038,299
Vesting of restricted shares (in shares)													84,396
RSU granted (in shares)							27,456					38,672
Compensation expense, general and administrative | $										$ 1,200,000	$ 900,000		$ 2,800,000	2,400,000
Compensation expense, operating | $										100,000	$ 100,000		400,000	$ 300,000
Total unrecognized compensation cost | $						$ 17,400,000				$ 17,400,000			$ 17,400,000
Weighted average period													5 years 3 months
OP units redeemed (in shares)										22,798
Subsequent event
Stockholder's Equity (Details) [Line Items]
Common stock dividend declared (in dollars per share) | $ / shares		$ 0.2375
Declared
Stockholder's Equity (Details) [Line Items]
Amount Per Share (in dollars per share) | $ / shares																$ 0.2375	$ 0.2375
LTIP Units
Stockholder's Equity (Details) [Line Items]
Vesting of restricted shares (in shares)													0
Restricted shares
Stockholder's Equity (Details) [Line Items]
Vesting of restricted shares (in shares)													56,940
Requisite service period													3 years
Restricted Stock Units ("RSUs")
Stockholder's Equity (Details) [Line Items]
Vesting of restricted shares (in shares)													27,456
ATM Program
Stockholder's Equity (Details) [Line Items]
Gross proceeds | $										$ 3,843,000			$ 4,553,000
Fees and issuance costs | $										$ 153,000			$ 270,000
Shares issued (in shares)										265,225	0		320,307	0	751,382
Remaining authorized repurchase amount | $						$ 37,000,000				$ 37,000,000			$ 37,000,000
ESPP
Stockholder's Equity (Details) [Line Items]
Shares issued (in shares)						36,156				36,156			36,156		29,710
Compensation expense | $										$ 10,000.00	$ 1,625		$ 20,000.00	$ 20,000.00
Non-controlling interests
Stockholder's Equity (Details) [Line Items]
Non-controlling interests OP Units (in shares)						4,110,602				4,110,602			4,110,602		4,133,619
Non-controlling interests LTIP Units (in shares)						882,151				882,151			882,151		536,868
CEO | Non-controlling interests | LTIP
Stockholder's Equity (Details) [Line Items]
Shares issued in period (in shares)			57,057						143,288
Compensation deferral percentage									1
Officers and employees
Stockholder's Equity (Details) [Line Items]
RSU granted (in shares)													63,512
Restricted shares vested (in shares)													63,086
Restricted shares withheld (in shares)													21,310
Officers and employees | Restricted shares
Stockholder's Equity (Details) [Line Items]
Award vesting period													8 years
Director | LTIP Units
Stockholder's Equity (Details) [Line Items]
Award vesting period													8 years
Vesting of restricted shares (in shares)													143,288
Director | Restricted shares
Stockholder's Equity (Details) [Line Items]
Award vesting period													3 years
Vested employee
Stockholder's Equity (Details) [Line Items]
RSU granted (in shares)													46,258
Individual employee
Stockholder's Equity (Details) [Line Items]
RSU granted (in shares)													1,197
Individual employee | Restricted shares | Subsequent event
Stockholder's Equity (Details) [Line Items]
RSU granted (in shares)					7,370
Individual employee | Restricted Stock Units ("RSUs") | Subsequent event
Stockholder's Equity (Details) [Line Items]
RSU granted (in shares)					9,941
Employee | Non-controlling interests | LTIP
Stockholder's Equity (Details) [Line Items]
Shares issued in period (in shares)			25,510
President | Non-controlling interests | LTIP
Stockholder's Equity (Details) [Line Items]
Shares issued in period (in shares)								75,489
Consultant | Non-controlling interests | LTIP
Stockholder's Equity (Details) [Line Items]
Shares issued in period (in shares)			3,304
Board Of Directors | LTIP
Stockholder's Equity (Details) [Line Items]
Vesting of restricted shares (in shares)						40,635
Class A common stock
Stockholder's Equity (Details) [Line Items]
Paid dividends | $										$ 5,900,000			$ 11,800,000
Shares issued upon redemption of OP units (in shares)										22,798
Class A common stock | OP and LP Units
Stockholder's Equity (Details) [Line Items]
Conversion ratio						1				1			1
Class A common stock | ATM Program
Stockholder's Equity (Details) [Line Items]
Consideration authorized | $				$ 50,000,000
Class A common stock | ATM Program | Subsequent event
Stockholder's Equity (Details) [Line Items]
Shares issued (in shares)	514,997
Class A common stock | ESPP
Stockholder's Equity (Details) [Line Items]
Total shares of Class A common stock (in shares)						100,000				100,000			100,000
Discount on shares (as a percent)													15.00%

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Stockholder's Equity - Activity under the ATM Program (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended		6 Months Ended		12 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022	Dec. 31, 2022
Stockholder's Equity (Details) [Line Items]
Net proceeds received			$ 4,561	$ 0
ATM Program
Stockholder's Equity (Details) [Line Items]
Shares issued	265,225	0	320,307	0	751,382
Gross proceeds	$ 3,996		$ 4,823
Fees and issuance costs	(153)		(270)
Net proceeds received	$ 3,843		$ 4,553
Average gross sales price per share (in dollars per share)	$ 15.07		$ 15.06

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Stockholder's Equity - Schedule of declared and paid dividends (Details) - $ / shares	May 24, 2023	Feb. 01, 2023
Declared
Stockholder's Equity (Details) - Schedule of declared and paid dividends [Line Items]
Average gross sales price per share (in dollars per share)	$ 0.2375	$ 0.2375

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Stockholder's Equity - Schedule of unvested shares of restricted stock (Details) - $ / shares	1 Months Ended		3 Months Ended	6 Months Ended
	Jul. 31, 2023	Jan. 31, 2023	Mar. 31, 2021	Jun. 30, 2023
Equity instrument activity
Outstanding, at beginning of period (in shares)	1,694,880	1,215,444		1,215,444
Granted (in shares)				580,052
Vesting of restricted shares (in shares)				(84,396)
Forfeited (in shares)				(16,220)
Outstanding, at end of period (in shares)				1,694,880
Weighted Average Grant Date Fair Value
Weighted average grant date fair value at beginning of period (in dollars per share)	$ 16.20	$ 16.12		$ 16.12
Granted (in dollars per share)				15.56
Vesting of restricted shares (in dollars per share)				12.17
Forfeited (in dollars per share)				8.51
Weighted average grant date fair value at end of period (in dollars per share)				$ 16.20
RSU granted (in shares)		27,456	38,672
Restricted Stock Units ("RSUs")
Equity instrument activity
Outstanding, at beginning of period (in shares)	301,796	229,500		229,500
Granted (in shares)				110,968
Vesting of restricted shares (in shares)				(27,456)
Forfeited (in shares)				(11,216)
Outstanding, at end of period (in shares)				301,796
Restricted shares
Equity instrument activity
Outstanding, at beginning of period (in shares)	510,933	449,076		449,076
Granted (in shares)				123,801
Vesting of restricted shares (in shares)				(56,940)
Forfeited (in shares)				(5,004)
Outstanding, at end of period (in shares)				510,933
LTIP Units
Equity instrument activity
Outstanding, at beginning of period (in shares)	882,151	536,868		536,868
Granted (in shares)				345,283
Vesting of restricted shares (in shares)				0
Forfeited (in shares)				0
Outstanding, at end of period (in shares)				882,151
LTIP Units | Real Estate Consultant
Equity instrument activity
Vesting of restricted shares (in shares)		(3,304)
LTIP Units | Real Estate Consultant | Subsequent event
Equity instrument activity
Vesting of restricted shares (in shares)	(5,143)

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Business Acquisition - Narrative (Details) - Postal real estate consulting business $ in Millions	Mar. 04, 2022 USD ($) shares
Business Acquisition [Line Items]
Issuance of OP units (in shares) | shares	79,794
Cash paid for acquisition	$ 0.2
Aggregate purchase price	1.7
Finite-lived intangibles	0.2
Goodwill	$ 1.5

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Subsequent Events - Narrative (Details) $ / shares in Units, $ in Thousands			1 Months Ended	3 Months Ended		6 Months Ended		12 Months Ended
	Aug. 07, 2023 USD ($) shares	Jul. 26, 2023 $ / shares	Aug. 07, 2023 USD ($) property	Jun. 30, 2023 USD ($) shares	Jun. 30, 2022 shares	Jun. 30, 2023 USD ($) shares	Jun. 30, 2022 shares	Dec. 31, 2022 USD ($) shares
Subsequent Events (Details) [Line Items]
Outstanding loan				$ 225,709		$ 225,709		$ 196,662
ATM Program
Subsequent Events (Details) [Line Items]
Shares issued | shares				265,225	0	320,307	0	751,382
Gross proceeds				$ 3,996		$ 4,823
Subsequent event
Subsequent Events (Details) [Line Items]
Common stock dividend declared (in dollars per share) | $ / shares		$ 0.2375
Number of postal properties acquired (in properties) | property			15
Payment to acquire property			$ 6,200
Subsequent event | ATM Program
Subsequent Events (Details) [Line Items]
Gross proceeds	$ 7,700
Subsequent event | At The Market Offering Program, Forward Sales Transaction
Subsequent Events (Details) [Line Items]
Gross proceeds	$ 12,000
Subsequent event | Class A common stock | ATM Program
Subsequent Events (Details) [Line Items]
Shares issued | shares	514,997
Subsequent event | Class A common stock | At The Market Offering Program, Forward Sales Transaction
Subsequent Events (Details) [Line Items]
Shares issued | shares	798,847
Subsequent event | Forecast
Subsequent Events (Details) [Line Items]
Number of postal properties acquired (in properties) | property			15
Payment to acquire property			$ 3,900
2021 Credit Facility | Line of credit | Subsequent event
Subsequent Events (Details) [Line Items]
Outstanding loan	$ 190,000		190,000
2021 Credit Facility | Revolving credit facility | Line of credit | Subsequent event
Subsequent Events (Details) [Line Items]
Outstanding loan	0		0
2021 Term Loan | Unsecured debt | Line of credit | Subsequent event
Subsequent Events (Details) [Line Items]
Outstanding loan	75,000		75,000
2022 Term Loan | Unsecured debt | Line of credit | Subsequent event
Subsequent Events (Details) [Line Items]
Outstanding loan	$ 115,000		$ 115,000

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Stockholders' Equity - Activity under the ATM Program (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended		6 Months Ended		12 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022	Dec. 31, 2022
Stockholder's Equity (Details) [Line Items]
Net proceeds received			$ 4,561	$ 0
ATM Program
Stockholder's Equity (Details) [Line Items]
Shares issued (in shares)	265,225	0	320,307	0	751,382
Gross proceeds	$ 3,996		$ 4,823
Fees and issuance costs	(153)		(270)
Net proceeds received	$ 3,843		$ 4,553
Average gross sales price per share (in dollars per share)	$ 15.07		$ 15.06