Postal Realty (PSTL) Q2 Revenue Up 29%

Postal Realty Trust (PSTL 4.72%), an owner and manager of postal properties primarily leased to the United States Postal Service (USPS), reported second-quarter 2025 earnings on August 4, 2025. The most important news in the release was that the company's Q2 2025 earnings (non-GAAP) and revenue (GAAP) surpassed Wall Street estimates by a wide margin. Postal Realty Trust reported GAAP revenue of $23.351 million, compared to the $20.623 million expected, and Adjusted Funds from Operations (AFFO) per share of $0.33, significantly ahead of the $0.08 analyst estimate. Net income attributable to common stockholders (GAAP) reached $3.6 million, up from $0.8 million a year earlier. The company also raised its AFFO (non-GAAP) and acquisition volume guidance for FY2025 and increased its quarterly dividend by 1% for Q4 2024. Overall, the quarter marked a period of sizable growth and operational progress, particularly in portfolio expansion and leasing execution.

Source: Analyst estimates for the quarter provided by FactSet.

What Postal Realty Trust Does and How It Succeeds

Postal Realty Trust is a real estate investment trust (REIT) that acquires and manages properties leased mainly to the USPS. Its portfolio includes over 2,150 properties nationwide. The company's revenue comes chiefly from rental agreements with the USPS, providing stable, long-term cash flows.

The business model relies on regularly acquiring new properties and maintaining high occupancy and timely lease renewals. Its main focus areas are growing the property base through acquisitions, executing new leases with the USPS (often with favorable terms such as longer durations and annual rent increases), and maintaining a strong balance sheet to support continued growth. The tenant concentration risk—reliance on a single tenant—remains a key factor, which Postal Realty Trust seeks to manage by deepening its relationship with the postal service and emphasizing the mission-critical nature of its assets.

Second Quarter Highlights and Key Trends

The quarter saw notable outperformance against analyst expectations, with non-GAAP EPS of $0.35 and GAAP revenue of $23.351 million, both exceeding analyst estimates. Revenue (GAAP) rose 29% year-over-year to $23.351 million, outpacing the consensus estimate by $2.7 million (GAAP). Funds from Operations (non-GAAP) reached $0.35 per share. Net income attributable to common stockholders (GAAP) was $3.614 million, a 343% increase compared to a year ago.

Growth was fueled by a robust pace of acquisitions. The company added 68 new USPS-leased properties for $35.9 million, lifting total properties owned to 1,806 across 49 states and one territory and increasing net leasable area to more than 6.8 million square feet. The occupancy rate was 99.8%. New acquisitions focused on last-mile and flex properties that command higher average rents, shifting the portfolio toward higher-value assets. Rental rates averaged $13.24 per square foot for last-mile and flex properties, substantially more than the $4.14 average for industrial properties.

Leasing execution stands out as a success factor. As of July 18, 2025, the company reported full completion of all lease renewals due in 2025 with the USPS. Management highlighted that 32% of the portfolio will have 10-year lease terms and 56% will include annual rent escalations (typically 3%) when all lease agreements through 2026 are executed. This shift toward longer leases with built-in increases helps cushion against inflation and creates steadier cash flows. Postal Realty Trust also recorded $0.2 million in catch-up lease payments from the USPS.

General and administrative (G&A) expenses (GAAP) rose 10.1% year-over-year to $4.316 million. At the same time, property operating expenses fell slightly, despite the enlarged portfolio. The company recognized $345,000 in net gains from casualty and impairment.

The balance sheet remained conservative, with $328 million in net debt, 86% of which is fixed-rate, and $104 million available under a revolving credit facility. However, cash on hand was relatively low at $2.0 million, making access to external funding important for further acquisitions. Postal Realty Trust raised $12.8 million through equity issuance and continued to use operating partnership (OP) units as part of its property purchases.

This marks a continuation of the company's gradual dividend growth.

What’s Coming Next: Outlook and Areas to Watch

Management raised its full-year 2025 AFFO (non-GAAP) per share guidance to $1.24–$1.26, up from the prior range of $1.20–$1.22, citing continued strength in acquisitions and internal leasing. Guidance for annual acquisition volume is now at or above $90.0 million for full year 2025, up from the previous $80.0 million–$90.0 million range. G&A expense guidance ticked higher to a range of $10.5 million–$11.5 million for FY2025. No other material changes were made to overall strategy or portfolio plans, and management expressed continued optimism about acquisition momentum and rent escalations in its lease portfolio.

Looking ahead, investors will want to monitor continued acquisition activity and how effectively the company manages its cash position amid stronger expansion. The ongoing reliance on capital markets for growth, potential increases in G&A expenses, and the high concentration of revenue from the USPS are key variables to watch. Postal Realty Trust also plans to maintain high occupancy, push for longer lease durations, and embed more annual rent escalations to reinforce its cash flows and dividend safety. The declared quarterly dividend was increased.

Revenue and net income presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted.