Postal Realty Trust (NYSE:PSTL) raised its 2026 earnings and acquisition guidance after a record quarter of property purchases, as executives said improved access to capital and rising rents helped drive growth.
The postal property owner reported third-quarter adjusted funds from operations (AFFO) of $0.36 per share, up 9.1% from a year earlier and unchanged from the second quarter. Chief Financial Officer Steve Bakke attributed the year-over-year increase primarily to internal growth and accretive acquisitions, while operating expense seasonality and one-time costs held earnings level with the prior quarter.
The company raised its full-year AFFO guidance by one cent to $1.42 to $1.44 per share. The $1.43 midpoint represents 8.3% growth for the year, with higher acquisition volume and improved borrowing costs driving the increase, Bakke said.
Acquisitions accelerate
Postal Realty acquired 145 properties for $82 million during the third quarter at a weighted average cash capitalization rate of 6.9%. The purchases added 388,000 square feet, including 101 last-mile post offices and 44 flex properties, President Jeremy Garber said.
For the first nine months of 2026, the company purchased 243 properties for approximately $162 million at a weighted average cash cap rate of 7.1%. It raised its full-year acquisition guidance to $185 million to $200 million, at a weighted average cap rate in the low 7% range.
Chief Executive Officer Andrew Spodek said the wider guidance range reflects uncertainty about how the company’s acquisition pipeline, access to capital and cost of capital will align in the fourth quarter, particularly amid market volatility. Bakke said the company’s current cost of capital is in the mid-6% range.
Spodek said Postal Realty considers potential rent growth alongside the initial yield on a purchase. He noted that more than 800 properties acquired from 2020 through 2022 for over $370 million have produced cash yields approximately 200 basis points higher than their initial blended cap rate of 7.1%, helped by lease renewals at market rents, operating efficiencies and annual rent escalators.
Among the third-quarter purchases highlighted by management were properties in Brooklyn, New York; St. Paul, Minnesota; and Greenwich, Connecticut. Spodek said 75% of the company’s deal flow is off-market and that sellers’ decisions are often connected to life events, estate planning or liquidity needs.
Leasing and balance sheet
Garber said the portfolio was 99.8% occupied and its historical lease retention rate was 99.6%. The company has completed its 2026 leases, is executing 2027 leases with the U.S. Postal Service and is discussing 2028 expirations, he said.
New 2027 leases will include 3% annual rent escalations, and the vast majority will have 10-year terms, excluding leases subject to existing renewal options, Garber said. At quarter-end, 60% of leases included annual rent escalations and 55% had 10-year terms. Postal Realty reaffirmed its forecast for 6.5% same-store cash revenue growth in 2027.
The company’s net debt to run-rate adjusted EBITDA was 4.4 times after equity settled in the third quarter, or 3.5 times on a pro forma basis including unsettled forward equity raised through October. During and after the quarter, Postal Realty raised $117 million through its at-the-market equity program, with $83 million of net proceeds remaining unsettled, Bakke said.
Postal Realty also received a BBB rating from Fitch in August, following a July credit facility recast that increased capacity by $60 million and added more favorable pricing upon an investment-grade rating. Spodek said the company had more than $340 million of liquidity, including unsettled forwards.
Dividend and Postal Service outlook
The board approved a quarterly dividend of $0.245 per share, up 1% from a year earlier. Bakke said the third-quarter payout ratio was approximately 68%. While dividend decisions rest with the board, he said retaining cash supports the company’s financial position and allows it to reinvest in the business.
Asked about the Postal Service’s losses and liquidity concerns, Spodek said lease negotiations had not changed. He added that the agency has not historically sold a significant number of properties in which it intended to remain a major tenant, and he could not say whether its financial situation would prompt asset sales. Postal Realty would be ready to buy such properties if they became available, he said.
About Postal Realty Trust (NYSE:PSTL)
Postal Realty Trust, Inc (NYSE:PSTL) is a real estate investment trust focused on acquiring, owning, managing and developing properties that are leased primarily to the United States Postal Service. Its portfolio is concentrated in postal facilities, including post offices and other properties used for postal operations.
The company generally leases its properties under long-term agreements, allowing it to generate rental income from a specialized portfolio of mission-critical facilities.
