10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549 

FORM 10-Q

(Mark One)

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

For the quarterly period ended September 30, 2019

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.

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

75 Columbia Avenue

Cedarhurst, NY 11516

(Address of principal executive offices) (Zip Code)

(516) 295-7820

(Registrant’s telephone number, including area code):

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

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

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

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

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

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

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

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

The number of shares of Class A Common Stock, par value $0.01 per share, of the registrant outstanding at November 11, 2019 was 5,285,904.

Postal Realty Trust, Inc.

QUARTERLY REPORT ON FORM 10-Q
FOR THE QUARTER ENDED SEPTEMBER 30, 2019

Table of Contents

PART I. FINANCIAL INFORMATION		1
Item 1.	Financial Statements	1
	Consolidated and Combined Consolidated Balance Sheets at September 30, 2019 (Unaudited) and December 31, 2018	1
	Consolidated and Combined Consolidated Statements of Operations for the Three and Nine Months Ended September 30, 2019 and 2018 (Unaudited)	2
	Consolidated and Combined Consolidated Statements of Changes in Equity (Deficit) for the Three and Nine Months Ended September 30, 2019 and 2018 (Unaudited)	3
	Consolidated and Combined Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2019 and 2018 (Unaudited)	4
	Notes to Consolidated and Combined Consolidated Financial Statements (Unaudited)	5
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	19
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	32
Item 4.	Controls and Procedures	32
PART II. OTHER INFORMATION		33
Item 1.	Legal Proceedings	33
Item 1A.	Risk Factors	33
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	33
Item 3.	Defaults Upon Senior Securities	33
Item 4.	Mine Safety Disclosures	33
Item 5.	Other Information	33
Item 6.	Exhibits	34

i

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

Postal Realty Trust, Inc. and Predecessor
Consolidated and Combined Consolidated Balance Sheets

	September 30,			December 31,
	2019			2018
	(Unaudited)			(Predecessor)
ASSETS
Real estate properties
Land	$	16,827,724		$	7,239,213
Buildings and improvements		57,177,951			29,550,076
Tenant improvements		2,114,364			1,646,215
Total real estate properties		76,120,039			38,435,504
Less: accumulated depreciation		(8,180,839	)		(7,121,532	)
Total real estate properties, net		67,939,200			31,313,972
Cash		10,969,557			262,926
Escrows and reserves		610,200			598,949
Rent and other receivables		1,138,621			601,670
Prepaid expenses and other assets		2,853,298			146,014
Deferred rent receivable		31,687			14,060
In-place lease intangibles (net of accumulated amortization of $5,628,459 and $4,388,699, respectively)		4,776,515			2,735,927
Above market leases (net of accumulated amortization of $16,539 and $8,688, respectively)		9,401			10,914
Total assets	$	88,328,479		$	35,684,432
LIABILITIES AND EQUITY (DEFICIT)
Liabilities
Secured borrowings, net	$	3,237,327		$	34,792,419
Revolving credit facility		17,000,000			-
Accounts payable, accrued expenses and other		4,224,599			1,869,084
Below market leases (net of accumulated amortization of $1,860,167 and $1,525,540, respectively)		5,365,118			3,842,495
Deferred tax liability, net		-			793,847
Due to affiliates		512,530			-
Total liabilities	$	30,339,574		$	41,297,845
Commitments and contingencies
Equity (deficit)
Common stock,
PSTL - $.01 par value per share
Class A, 500,000,000 shares authorized: 5,285,904 shares issued and outstanding		52,859			-
Class B, 27,206 shares authorized: 27,206 shares issued and outstanding		272			-
UPH - no par, 1,000 shares authorized: 1,000 shares issued and outstanding		-			4,000,000
NPM - no par, 200 shares authorized: 200 shares issued and outstanding		-			200
Additional paid-in capital		46,502,630			3,441,493
Accumulated deficit		(1,034,471	)		(11,003,876	)
Member’s deficit		-			(2,095,823	)
Total Stockholders’ and Predecessor Equity (Deficit)		45,521,290			(5,658,006	)
Operating Partnership unitholders’ noncontrolling interests		12,467,615			-
Noncontrolling interest in properties		-			44,593
Total equity (deficit)		57,988,905			(5,613,413	)
Total liabilities and equity (deficit)	$	88,328,479		$	35,684,432

(The accompanying notes are an integral part of these unaudited financial statements)

1

Postal Realty Trust, Inc. and Predecessor
Consolidated and Combined Consolidated Statements of Operations
For the Three and Nine Months Ended September 30, 2019 and 2018 (Unaudited)

				Predecessor						Predecessor
	Three months ended September 30, 2019			Three months ended September 30,  2018			Nine months ended September 30, 2019			Nine months ended September 30, 2018
Revenues
Rent income	$	2,387,082		$	1,417,534		$	5,735,896		$	4,199,767
Tenant reimbursements		342,419			220,676			852,504			668,502
Fee and other income		278,846			255,971			842,097			862,317
Total revenues		3,008,347			1,894,181			7,430,497			5,730,586
Operating expenses
Real estate taxes		353,663			227,373			880,117			688,953
Property operating expenses		332,892			203,994			821,839			639,289
General and administrative		1,207,197			282,361			2,385,228			1,086,384
Equity-based compensation		394,530			-			584,873			-
Depreciation and amortization		1,066,338			457,907			2,314,553			1,363,575
Total operating expenses		3,354,620			1,171,635			6,986,610			3,778,201
Income (loss) from operations		(346,273	)		722,546			443,887			1,952,385
Interest expense, net:
Contractual interest expense		(48,916	)		(361,743	)		(635,423	)		(1,112,353	)
Amortization of deferred financing costs		(4,523	)		(3,126	)		(9,558	)		(9,375	)
Loss on early extinguishment of Predecessor debt		-			-			(185,586	)		-
Interest income		1,136			1,158			3,394			3,370
Total interest expense, net		(52,303	)		(363,711	)		(827,173	)		(1,118,358	)
Income (loss) before income tax (expense) benefit		(398,576	)		358,835			(383,286	)		834,027
Income tax (expense) benefit		6,259			143,382			(39,749	)		83,742
Net income (loss)		(392,317	)		502,217			(423,035	)		917,769
Less:
Net income attributable to noncontrolling interest in properties		-			(2,829	)		(4,336	)		(9,462	)
Net (income) loss attributable to Predecessor	$	-		$	499,388		$	(463,414	)	$	908,307
Net loss attributable to Operating Partnership unitholders’ noncontrolling interests		84,348						191,020
Net income (loss) attributable to common stockholders	$	(307,969	)				$	(699,765	)
Net income (loss) per share (basic and diluted)	$	(0.06	)				$	(0.14	)
Weighted average common shares outstanding (basic and diluted)		5,164,264						5,164,264

(The accompanying notes are an integral part of these unaudited financial statements)

2

Postal Realty Trust, Inc. and Predecessor
Consolidated and Combined Consolidated Statements of Changes in Equity (Deficit)
Periods Ended September 30, 2019 and 2018 (Unaudited)

	Number of common shares		Common Stock			Additional Paid-in Capital			Accumulated Equity (Deficit)			Member’s Equity (Deficit)			Total stockholders’ & Predecessor equity			Operating Partnership unitholders’ noncontrolling interests			Noncontrolling interest in properties			Total equity interest
Predecessor
Balance - December 31, 2018		1,200		4,000,200		$	3,441,493		$	(11,003,876	)	$	(2,095,823	)	$	(5,658,006	)		-		$	44,593		$	(5,613,413	)
Capital contributions		-		-			397,121			-			1,377,758			1,774,879			-			-			1,774,879
Distributions and dividends		-		-			(150,000	)		-			(1,067,515	)		(1,217,515	)		-			(521	)		(1,218,036	)
Net income (loss)		-		-			-			(173,554	)		427,787			254,233			-			2,843			257,076
Balance - March 31, 2019		1,200		4,000,200			3,688,614			(11,177,430	)		(1,357,793	)		(4,846,409	)		-			46,915			(4,799,494	)
Capital contributions		-		0			0			0			293,373			293,373			-			0			293,373
Distributions and dividends		-		0			(549,191	)		0			(310,174	)		(859,365	)		-			(5,667	)		(865,032	)
Net income (loss)		-		0			0			3,210			205,971			209,181			-			1,493			210,674
Balance- May 16, 2019		1,200		4,000,200			3,139,423			(11,174,220	)		(1,168,623	)		(5,203,220	)		-			42,741			(5,160,479	)
Net proceeds from sale of common stock		4,500,000		45,000			64,665,261			-			-			64,710,261			-			-			64,710,261
Formation transactions		664,264		(3,993,557	)		(31,798,499	)		11,174,220			1,168,623			(23,449,213	)		22,662,907			(42,741	)		(829,047	)
Issuance and amortization of equity-based compensation		148,529		1,485			126,755			-			-			128,240			62,103			-			190,343
Dividends declared		-		-			-			(334,706	)		-			(334,706	)		(91,213	)		-			(425,919	)
Net income (loss)										(391,796	)		-			(391,796	)		(106,672	)		-			(498,468	)
Reallocation of non-controlling interest		-		-			10,117,974			-			-			10,117,974			(10,117,974	)		-			-
Balance- June 30, 2019		5,312,793		53,128			46,250,914			(726,502	)					45,577,540			12,409,152			-			57,986,692
Issuance and amortization of equity-based compensation		317		3			262,181			-			-			262,184			132,346			-			394,530
Net income (loss)		-		-			-			(307,969	)		-			(307,969	)		(84,348	)		-			(392,317	)
Reallocation of non-controlling interest		-		-			(10,465	)		-			-			(10,465	)		10,465			-			-
Balance- September 30, 2019		5,313,110	$	53,131		$	46,502,630		$	(1,034,471	)		-		$	45,521,290		$	12,467,615			-		$	57,988,905
Predecessor
Balance - December 31, 2017		1,200	$	4,000,200		$	3,650,309		$	(10,693,356	)	$	(7,012,369	)	$	(10,055,216	)		-		$	44,577		$	(10,010,639	)
Capital contributions		-		-			135,577			-			1,046,284			1,181,861			-			2,651			1,184,512
Distributions and dividends		-		-			(100,245	)		-			(1,904,107	)		(2,004,352	)		-			(2,651	)		(2,007,003	)
Net income (loss)		-		-			-			(228,940	)		319,581			90,641			-			3,822			94,463
Balance - March 31, 2018		1,200		4,000,200			3,685,641			(10,922,296	)		(7,550,611	)		(10,787,066	)		-			48,399			(10,738,667	)
Capital contributions		-		-			199,003			-			5,038,920			5,237,923			-			1,854			5,239,777
Distributions and dividends		-		-			(200,142	)		-			(780,516	)		(980,658	)		-			(1,854	)		(982,512	)
Net income (loss)		-		-			-			(51,721	)		369,999			318,278			-			2,811			321,089
Balance - June 30, 2018		-		4,000,200			3,684,502			(10,974,017	)		(2,922,208	)		(6,211,523	)		-			51,210			(6,160,313	)
Capital contributions		-		-			10,601			-			549,680			560,281			-			6,632			566,913
Distributions and dividends		-		-			(228,500	)		-			(851,888	)		(1,080,388	)		-			(6,632	)		(1,087,020	)
Net income (loss)		-		-			-			128,089			371,299			499,388			-			2,829			502,217
Balance - September 30, 2018		1,200	$	4,000,200		$	3,466,603		$	(10,845,928	)	$	(2,853,117	)	$	(6,232,242	)		-		$	54,039		$	(6,178,203	)

(The accompanying notes are an integral part of these unaudited financial statements)

3

Postal Realty Trust, Inc. and Predecessor
Consolidated and Combined Consolidated Statements of Cash Flows
Periods Ended September 30, 2019 and 2018 (Unaudited)

				Predecessor
	Nine months ended September 30, 2019			Nine months ended September 30, 2018
Cash flows from operating activities
Net (loss) income	$	(423,035	)	$	917,769
Adjustments to reconcile net (loss) income to net cash provided by operating activities:
Depreciation		1,074,793			747,125
Amortization of in-place intangibles		1,239,760			616,450
Amortization of deferred financing costs		9,558			9,375
Amortization of above market leases		7,851			6,319
Amortization of below market leases		(334,627	)		(215,955	)
Equity-based compensation		584,873			-
Loss on extinguishment of debt		185,586			-
Deferred rent receivable		(17,627	)		1,481
Deferred rent expense payable		(41,374	)		-
Deferred tax liability		(65,895	)		(255,224	)
Change in assets and liabilities
Rent and other receivables		(802,618	)		2,863
Prepaid expenses and other assets		(260,038	)		(12,737	)
Due to affiliates		8,569			-
Accounts payable, accrued expenses and other		935,122			406,829
Net cash provided by operating activities	$	2,100,898		$	2,224,295
Cash flows from investing activities
Acquisition of real estate		(38,925,771	)		(1,334,591	)
Capital improvements		(105,116	)		(92,525	)
Acquisition deposits		(410,000	)		-
Net cash used in investing activities		(39,440,887	)		(1,427,116	)
Cash flows from financing activities
Net proceeds from issuance of common stock		66,624,167			-
Formation transactions		(2,007,417	)		-
Proceeds from mortgage payable		445,000			960,000
Repayments of mortgages payable		(32,191,238	)		(798,179	)
Proceeds from revolving credit facility		17,000,000			-
Debt issuance costs		(1,371,931	)		-
Capital contributions		2,068,252			3,446,987
Distributions and dividends		(2,508,962	)		(4,076,535	)
Net cash provided by (used in) financing activities		48,057,871			(467,727	)
Net increase in cash and restricted cash		10,717,882			329,452
Cash and restricted cash at beginning of period		861,875			694,418
Cash and restricted cash at end of period	$	11,579,757		$	1,023,870

(The accompanying notes are an integral part of these unaudited financial statements)

4

Postal Realty Trust, Inc. and Predecessor
Notes to Consolidated and Combined Consolidated Financial Statements
(Unaudited)

1. ORGANIZATION AND DESCRIPTION OF BUSINESS

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

The Company’s interest in the Operating Partnership entitles the Company to share in distributions from, and allocations of profits and losses of, the Operating Partnership in proportion to the Company’s percentage ownership of common 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 September 30, 2019, the Company held a 78.5% 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, or VIE, in which we are the primary beneficiary.

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

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

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

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

As of September 30, 2019, the Company owns and manages a portfolio of 289 postal properties located in 43 states. All of the properties were leased to a single tenant, the United States Postal Service (the “USPS”) other than a de-minimis non-postal tenant that shares space in a building leased to the USPS.

In addition, through its taxable REIT subsidiary (“TRS”), Postal Realty Management TRS, LLC (“PRM”), the Company provides fee-based third party property management services for an additional 403 postal properties, which are owned by Mr. Spodek, his family members and their partners.

The Company is a Maryland corporation formed on November 19, 2018 and until May 15, 2019, was authorized to issue up to 600,000,000 shares of common stock, par value $0.01 per share. On May 15, 2019, in connection with the IPO, we amended our articles of incorporation such that the Company is currently authorized to issue up to 500,000,000 shares of Class A Common Stock, 27,206 shares of Class B common stock, $0.01 par value per share (our “Class B Common Stock”), and up to 100,000,000 shares of preferred stock. The Company elected to be taxed as an S-Corporation under the Internal Revenue Code of 1986, as amended (the “Code”), effective November 19, 2018, and as such, all federal tax liabilities were the responsibility of the Company’s sole stockholder until the completion of our IPO. In anticipation of the IPO, the Company revoked its S-Corporation election on May 14, 2019. The Company intends to qualify and elect to qualify as a real estate investment trust (“REIT”) under the Code beginning with its short taxable year ending December 31, 2019. As a REIT, the Company generally will not be subject to federal income tax to the extent that it distributes at least 90% of its taxable income for each tax year to its stockholders. REITs are subject to a number of organizational and operational requirements.

5

2. THE COMPANY’S IPO AND THE FORMATION TRANSACTIONS

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

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

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

Pursuant to the Formation Transactions, the Company, directly or through the Operating Partnership, acquired the entities that comprise the Predecessor. The initial properties and other interests were contributed in exchange for 1,333,112 OP Units, 637,058 shares of our Class A Common Stock, 27,206 shares of our Class B Common Stock and $1.9 million of cash. In addition, the Operating Partnership purchased 100% interests in 81 post office properties (the “Acquisition Properties”) in exchange for $26.9 million in cash, including approximately $1.0 million paid to Mr. Spodek, the Company’s chief executive officer and a director for his non-controlling ownership in nine of the Acquisition Properties.

Because of the timing of the IPO and the Formation Transactions, the Company’s financial condition as of December 31, 2018 and results of operations for the three and nine months ended September 30, 2018 reflect the financial condition and results of operations of the Predecessor. The results of operations for the three months ended September 30, 2019 reflects solely the operations of the Company and the results of operations for the nine months ended September 30, 2019 reflect the results of operations of the Predecessor together with the Company, while the financial condition as of September 30, 2019 reflects solely the Company. References in these notes to consolidated financial statements to “Postal Realty Trust, Inc.” signify the Company for the period after the completion of the IPO and the Formation Transactions and the Predecessor for all prior periods.

6

The following is a summary of the Predecessor Statements of Operations for the period from April 1, 2019 through May 16, 2019 and for the period from January 1, 2019 through May 16, 2019, and the Company’s Statement of Operations for the period from May 17, 2019 through September 30, 2019. These amounts are included in the consolidated and combined consolidated statement of operations herein for the three and Nine months ended September 30, 2019. All balances as of December 31, 2018 and for the three and nine months ended September 30, 2018 are those of the Predecessor.

	Predecessor						Postal Realty Trust, Inc.
	April 1,  2019  through May 16, 2019			January 1,  2019  through May 16, 2019			May 17, 2019 through September 30, 2019
Revenues:
Rent income	$	756,969		$	2,249,355		$	3,486,541
Tenant reimbursements		111,219			348,075			504,429
Fee and other income		141,033			427,959			414,138
Total revenues	$	1,009,221		$	3,025,389		$	4,405,108
Operating Expenses:
Real estate taxes		114,783			358,693			521,424
Property operating expenses		117,958			357,779			464,060
General and administrative		106,549			501,204			1,884,024
Equity-based compensation		-			-			584,873
Depreciation and amortization		245,313			725,756			1,588,797
Total operating expenses	$	584,603		$	1,943,432		$	5,043,178
Income (loss) from operations		424,618			1,081,957			(638,070	)
Interest expense, net:
Contractual interest expense		(212,352	)		(570,819	)		(64,604	)
Amortization of deferred financing costs		(1,592	)		(4,773	)		(4,785	)
Loss on early extinguishment of Predecessor debt		-			-			(185,586	)
Interest income		-			1,134			2,260
Total interest expense, net		(213,944	)		(574,458	)		(252,715	)
Income (loss) before income tax expense		210,674			507,499			(890,785	)
Income tax (benefit) expense		-			(39,749	)		-
Net income (loss)	$	210,674		$	467,750		$	(890,785	)
Less:
Net income attributable to noncontrolling interest in properties		(1,493	)		(4,336	)		-
Net income attributable to Predecessor	$	209,181		$	463,414			-
Net loss attributable to Operating Partnership unitholders’ noncontrolling interests								191,020
Net loss attributable to common stockholders							$	(699,765	)

7

3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The accompanying consolidated and combined consolidated financial statements of the Company include the financial position and results of operations of the Company, the Operating Partnership and its wholly owned subsidiaries. The Predecessor represents a combination of certain entities holding interests in real estate that were commonly controlled prior to the Formation Transactions. Due to their common control, the financial statements of the separate entities which own the properties and the management company are presented on a combined basis. The effects of all significant intercompany balances and transactions have been eliminated.

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

A non-controlling interest is defined as the portion of the equity in an entity not attributable, directly or indirectly, to the Company. Non-controlling interests are required to be presented as a separate component of equity in the consolidated and combined consolidated balance sheets. Accordingly, the presentation of net income is modified to present the income attributed to controlling and non-controlling interests.

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

The information furnished in the accompanying consolidated and combined consolidated financial statements reflects all adjustments that, in the opinion of management, are necessary for a fair presentation of the aforementioned consolidated and combined consolidated financial statements for the interim periods. Operating results for the three and nine months ended September 30, 2019 are not necessarily indicative of the results that may be expected for the year ending December 31, 2019. These interim financial statements should be read in conjunction with, and follow the same policies and procedures as outlined in the audited combined consolidated financial statements for the year ended December 31, 2018, included in the Company’s final prospectus dated May 14, 2019.

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 and disclosure of commitments and contingencies at the date of the consolidated and combined consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ materially from these estimates.

Offering and Other Costs

Certain of the costs related to the IPO and the Formation Transactions paid by an affiliate of the Company’s initial sole shareholder were reimbursed by the Company from the proceeds of the IPO. Offering costs were recorded in stockholders’ equity as a reduction of additional paid-in capital. Transaction costs related to asset acquisitions were capitalized as part of the acquisition. As of September 30, 2019, approximately $0.5 million of offering and other costs are owed to an affiliate of the Company’s initial sole shareholder.

Investments in Real Estate

Upon the acquisition of real estate, the purchase price is allocated based upon the fair value of the assets acquired and liabilities assumed. The allocation of the purchase price to the fair value of the tangible assets of an acquired property is derived by valuing the property as if it were vacant. All real estate acquisitions in the periods presented qualified as asset acquisitions and, as such, acquisition-related fees and acquisition-related expenses related to these asset acquisitions were capitalized and allocated to tangible and intangible assets and liabilities.

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Investments in real estate generally include land, buildings, tenant improvements and identified intangible assets, such as in-place lease intangibles and above or below-market lease intangibles. Direct and certain indirect costs clearly associated with the development, construction, leasing or expansion of real estate assets are capitalized as a cost of the property. Repairs and maintenance costs are expensed as incurred. Depreciation on buildings generally is provided on a straight-line basis over 40 years. Tenant improvements are depreciated over the shorter of their estimated useful lives or the term of the related lease. The acquired in-place lease values are amortized to expense over the average remaining non-cancellable term of the respective in-place leases. The acquired above or below-market lease intangibles are amortized to rent income over the applicable lease term, inclusive of any option periods for below-market leases.

The carrying value of real estate investments and related intangible assets is 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. For the three and nine months ended September 30, 2019 and 2018, no impairment loss was recorded.

During the three months ended September 30, 2019, the Company acquired eighteen properties for a purchase price of $11.1 million, inclusive of acquisition costs of $0.1 million. During the three months ended June 30, 2019, the Company acquired the Acquisition Properties in connection with the IPO for a purchase price of $27.3 million, inclusive of acquisition costs of $0.4 million. During the three months ended March 31, 2019, the Predecessor acquired one property for a purchase price of $645,120, inclusive of acquisition costs of $10,120. The purchase prices 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 was allocated as follows:

	Three months ended
	September 30, 2019			June 30, 2019			March 31, 2019
Land	$	2,619,719		$	6,789,589		$	179,202
Building and improvements		8,301,678			18,774,918			456,550
Tenant improvements		190,343			259,640			18,166
In-place lease intangibles		982,974			2,227,870			69,504
Above-market leases		-			6,338			-
Below market leases		(1,024,644	)		(754,300	)		(78,302	)
Total	$	11,070,070		$	27,304,055		$	645,120

During the nine months ended September 30, 2018, the Predecessor acquired seven properties for an aggregate purchase price of $1,334,591, inclusive of acquisition costs of $19,598. The purchase price was 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 was allocated as follows:

	Nine months ended
	September 30, 2018
Land	$	502,667
Building and improvements		825,811
Tenant improvements		29,029
In-place lease intangibles		171,713
Above-market leases		19,602
Below market leases		(214,231	)
Total	$	1,334,591

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Cash and Restricted Cash

Cash and cash equivalents include cash and highly liquid investment securities with maturities at acquisition of three months or less. Restricted cash is presented as escrows and reserves in the accompanying consolidated and combined consolidated balance sheets. Cash and restricted cash consist of the following:

	September 30, 2019 (Unaudited)		December 31, 2018
Cash	$	10,969,557	$	262,926
Restricted cash:
Maintenance reserve		602,306		598,949
ESPP reserve		7,894		-
Total cash and restricted cash	$	11,579,757	$	861,875

Fair Value of Financial Instruments

The following disclosure of estimated fair value was determined by management using available market information and appropriate valuation methodologies. However, considerable judgment is necessary to interpret market data and develop estimated fair value. Accordingly, the estimates presented herein are not necessarily indicative of the amounts the Company could realize on disposition of the assets and liabilities at September 30, 2019 and December 31, 2018. The use of different market assumptions and/or estimation methodologies may have a material effect on the estimated fair value amounts. Cash, escrows and deposits, receivables, prepaid expenses, accounts payable and accrued expenses and due to affiliates are carried at amounts which reasonably approximate their fair values as of September 30, 2019 and December 31, 2018 due to their short maturities. The fair value of the Company’s borrowings under its senior revolving credit facility approximates carrying value. The fair value of the Company’s secured borrowings aggregated approximately $3,208,680 and $33,586,000, as compared to the principal balance of $3,272,911 and $35,019,149 as of September 30, 2019 and December 31, 2018, respectively. The fair value of the Company’s debt was categorized as a level 3 basis (as provided by ASC 820, Fair Value Measurements and Disclosures). The fair value was estimated using a discounted cash flow analysis valuation based on the borrowing rates currently available to the Company for loans with similar terms and maturities. The fair value of the mortgage debt was determined by discounting the future contractual interest and principal payments by a market rate.

Disclosure about fair value of assets and liabilities is based on pertinent information available to management as of September 30, 2019 and December 31, 2018, respectively. 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 September 30, 2019 and current estimates of fair value may differ significantly from the amounts presented herein.

Revenue Recognition

The Company has operating lease agreements with tenants, some of which contain provisions for future rent 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 tenant reimbursement revenue.

Fee and other income primarily consist of property management fees. These 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.

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 receipt of insurance proceeds is deemed probable. Any amount of insurance recovery in excess of the amount of the losses incurred is considered a gain contingency and is not recorded in fee and other income until the proceeds are received. 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 proceeds are received.

10

Income Taxes

UPH was subject to federal income tax and state franchise taxes in jurisdictions where it conducts business. See Note 8. Income Taxes for a discussion of the treatment of the deferred tax assets and liabilities in connection with the IPO.

Income taxes or credits resulting from earnings or losses for the LLCs, the limited partnership and NPM were payable by or accrue to the benefit of the members/partners/shareholders of such entities. No provision has been made for income taxes for these pass-through entities in the combined consolidated financial statements.

For periods subsequent to the completion of the IPO and the Formation Transactions, PRM is subject to federal, state and local corporate income taxes to the extent there is taxable income.

Noncontrolling Interests

Noncontrolling interests in the Company represent common units of limited partnership interest of the Operating Partnership (“Common Units”) held by the Predecessor’s prior investors and long term incentive units of the Operating Partnership (“LTIP Units”) held by the Company’s CEO. Upon completion of the IPO and the Formation Transactions, the Operating Partnership issued 1,333,112 Common Units to the Predecessor’s prior investors as partial consideration for the contribution of their interest in the Predecessor to the Operating Partnership and 114,706 LTIP Units to the Company’s CEO. During the three months ended September 30, 2019, the Company issued 5,298 LTIP Units to an employee.

Dividends

On June 26, 2019, the board of directors of the Company approved and the Company declared a pro-rated cash dividend of $0.063 per share and common unit for the period from May 17, 2019, the closing date of the IPO, to September 30, 2019. The dividend was paid on July 31, 2019 to stockholders and common unitholders of record as of the close of business on July 9, 2019 consisting of $0.3 million in dividends to stockholders and $0.1 million to common unitholders. On November 5, 2019, the board of directors of the Company approved and the Company declared a cash dividend of $0.14 per share and common unit for the quarter ended September 30, 2019. The dividend will be paid on December 2, 2019 to stockholders and common unitholders of record as of the close of business on November 15, 2019 consisting of $0.7 million in dividends to stockholders and $0.2 million to common unitholders.

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. The estimated grant date fair value of restricted stock units is amortized over their respective vesting periods. See Note 11. Stockholder’s Equity for further details.

Earnings per Share

The Company calculates net income (loss) per share based upon the weighted average shares outstanding during the period beginning May 17, 2019. Diluted earnings per share is calculated after giving effect to all potential dilutive shares outstanding during the period. There were 1,453,116 potentially dilutive shares outstanding related to the issuance of Common Units and LTIP Units held by noncontrolling interests as of September 30, 2019.

Reclassifications

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

Accounting Standards Adopted in 2019

In May 2014, the Financial Accounting Standards Board issued Accounting Standards Update (“ASU”) No. 2014-09, Revenue from Contracts with Customers (“ASU 2014-09”) and established Accounting Standards Codification (“ASC”) Topic 606. ASU 2014-09, as amended by subsequent ASUs on the topic, establishes a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and supersedes most of the existing revenue recognition guidance.

This standard is effective for interim and annual reporting periods that begin on or after December 15, 2018 as a result of the Company’s status as an emerging growth company. The Company and the Predecessor adopted ASU 2014-09 on January 1, 2019 using the modified retrospective method however, there was no cumulative effect required to be recognized in retained earnings at the date of application. Substantially all of the Company’s revenue is derived from its tenant leases and therefore falls outside the scope of this guidance. With respect to its fee-based revenue, the Company earns monthly base management fees subject to the terms of the contractual agreements with entities that are affiliated with the Company for the day-to-day operations and administration of its managed properties. These services are provided in exchange for monthly management fees, which are based on a percentage of revenues collected from post offices owned by entities that are affiliated with the Company. The Company determined that there is no change to revenue recognition for base management fees as the underlying services are considered to be individual performance obligations composed of a series of distinct services satisfied over time, for which revenue is recognized monthly as earned over the life of the management agreement as services are provided. The total amount of consideration from the contracts is variable as it is based on monthly revenues, which are influenced by multiple factors, some of which are outside the Company’s control. Therefore, the Company recognizes the revenue at the end of each month once the uncertainty is resolved. Due to the standardized terms of the management agreements, the Company accounts for all management agreements in a similar, consistent manner. Therefore, no disaggregated information relating to management agreements is presented.

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Future Application of Accounting Standards

In February 2016, the FASB issued ASU No. 2016-02, Leases (“ASU 2016-02”). ASU 2016-02 outlines a new model for accounting by lessees, whereby all leases, existing and new, with lease terms greater than one year will be recognized on the balance sheet. For lessors, however, the accounting remains largely unchanged from the current model, changes have been made to align certain lessor and lessee accounting guidance and the key aspects of the lessor accounting model with new revenue recognition standard discussed above. Under the new guidance, contract consideration will be allocated to its lease components and non-lease components (such as maintenance). For the Company as a lessor, any non-lease components will be accounted for under ASC Topic 606, Revenue from Contracts with Customers, unless the Company elects a lessor practical expedient to not separate the non-lease components from the associated lease component (see discussion below). The new guidance also includes a definition of initial direct costs that is narrower than the prior definition in current GAAP (Topic 840, Leases). This will result in a change to the accounting for the Company’s internal leasing costs, which will be expensed as incurred, as opposed to being capitalized and deferred. Commissions subsequent to successful lease execution will continue to be capitalized.

ASU 2016-02 initially provided for one retrospective transition method; however, a second transition method was later added with ASU 2018-11 as described below. To ease the transition, the new lease accounting guidance permits companies to utilize certain practical expedients in their implementation of the new standard:

● A package of three practical expedients that must be elected together for all leases and includes: (i) not reassessing expired or existing contracts as to whether they are or contain leases; (ii) not reassessing lease classification of existing leases and (iii) not reassessing the amount of capitalized initial direct costs for existing leases;

● ASU 2016-02 also includes a practical expedient to use hindsight in determining the lease term or assessing purchase options for existing leases and in assessing impairment of right of use assets;

● ASU 2018-01, Land Easements Practical Expedient for Transition to Topic 842 added a transition practical expedient to not reassess existing or expired land easement agreements not previously accounted for as leases; and

● A new practical expedient under ASU 2018-11, described below.

In July 2018, the FASB issued ASU No. 2018-10, Codification Improvements to Topic 842, Leases. These amendments provide minor clarifications and corrections to ASU 2016-02, Leases (Topic 842). In July 2018, the FASB issued ASU No. 2018-11, Leases (Topic 842): Targeted Improvements. The amendments in this Update provide entities with an additional optional transition method to adopt ASU 2016-02. Under this new transition method, an entity may apply the new leases standard at the adoption date instead of the earliest comparative period presented in its financial statements and recognizes a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption. Consequently, an entity’s reporting under this additional transition method for the comparative periods presented in the financial statements prior to the adoption date of the new leases standard will continue to be in accordance with current GAAP (Topic 840, Leases). The amendments in ASU 2018-11 also provide lessors with a practical expedient, by class of underlying asset, to not separate non-lease components from the associated lease component and, instead, to account for those components as a single component if the non-lease components otherwise would be accounted for under the new revenue guidance (“Topic 606”). To elect the practical expedient, the timing and pattern of transfer of the lease and non-lease components must be the same and the lease component must meet the criteria to be classified as an operating lease if accounted for separately. If these criteria are met, the single component will be accounted for under either under Topic 842 or Topic 606 depending on which component(s) are predominant. The lessor practical expedient to not separate non-lease components from the associated component must be elected for all existing and new leases.

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As lessor, the Company expects that post-adoption substantially all existing leases will have no change in the timing of revenue recognition until their expiration or termination. The Company expects to elect the package of practical expedients and the lessor practical expedient to not separate non-lease components such as maintenance from the associated lease for all existing and new leases and to account for the combined component as a single lease component. The timing of revenue recognition is expected to be the same for the majority of the Company’s new leases as compared to similar existing leases; however, certain categories of new leases could have different revenue recognition patterns as compared to similar existing leases. As lessee, the Company expects to record a right of use asset and related liability for the office lease disclosed in Note 9. Related Party Transactions.

In December 2018, the FASB issued ASU 2018-20 Leases (Topic 842), Narrow-Scope Improvements for Lessors. This ASU modifies ASU No. 2016-02 to permit lessors, as an accounting policy election, not to evaluate whether certain sales taxes and other similar taxes are lessor costs or lessee costs. Instead, those lessors will account for those costs as if they are lessee costs. Consequently, a lessor making this election will exclude from the consideration in the contract and from variable payments not included in the consideration in the contract all collections from lessees of taxes within the scope of the election and will provide certain disclosures (includes sales, use, value added, and some excise taxes and excludes real estate taxes). The Company has elected not to evaluate whether the aforementioned costs are lessor or lessee costs. ASU 2018-20 also provides that certain lessor costs require lessors to exclude from variable payments, and therefore revenue, specifically lessor costs paid by lessees directly to third parties. The amendments also require lessors to account for costs excluded from the consideration of a contract that are paid by the lessor and reimbursed by the lessee as variable payments. A lessor will record those reimbursed costs as revenue.

Topic 842 will be effective for the Company on January 1, 2021 as a result of its classification as an emerging growth company. The Company continues to evaluate the FASB’s activities related to the new leasing standard and the potential impact on its financial results, policies and disclosures upon adoption, including the accounting for costs which may be paid by the lessee directly to a third party, such as real estate taxes.

In December 2018, the FASB issued ASU No. 2018-20, Leases — Narrow-Scope Improvements for Lessors which provides guidance to Topic 842 in requiring lessors to recognize certain variable payment amounts in profit or loss in the period when the changes in facts and circumstances on which the variable payment is based occur. The Company is currently assessing the impact this guidance will have on its consolidated financial statements.

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

4. INTANGIBLE ASSETS AND LIABILITIES

Amortization of in-place lease intangibles was $1.2 million and $0.6 million for the nine months ended September 30, 2019 and 2018, respectively. This amortization is included in depreciation and amortization in the consolidated and combined consolidated statements of operations. Amortization of acquired above market leases was $7,851 and $6,319 for the nine months ended September 30, 2019 and 2018, respectively, and is included in rent income in the consolidated and combined consolidated statements of operations. Amortization of acquired below market leases was $334,627 and $215,955 for the nine months ended September 30, 2019 and 2018, respectively, and is included in rent income in the consolidated and combined consolidated statements of operations.

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The balance of these intangible assets and liabilities will be amortized as follows:

Year ending December 31,	In-Place Lease Intangibles		Below Market Leases		Above Market Leases
2019 – Remaining	$	567,742	$	167,579	$	1,372
2020		1,850,310		622,436		4,903
2021		1,304,600		555,645		1,975
2022		516,851		503,120		1,151
2023		265,875		455,109		-
Thereafter		271,137		3,061,229		-
Total	$	4,776,515	$	5,365,118	$	9,401

5. DEBT

The following table summarizes indebtedness as of September 30, 2019 and December 31, 2018:

Borrowing	September 30, 2019		December 31, 2018
Revolving Credit Facility (1)	$	17,000,000	$	-
Vision Bank		1,538,330		15,636,243
Atlanta Postal Credit Union		-		17,313,481
First Oklahoma Bank		381,391		389,599
Vision Bank – 2018		908,190		936,750
Seller Financing (2)		445,000		-
First Oklahoma Bank – 2018		-		743,076
Total debt	$	20,272,911	$	35,019,149

(1) On September 27, 2019, the Company entered into a $100 million Senior Revolving Credit Facility (“Facility”), which includes an accordion feature that will permit the Company to borrow up to $200 million, subject to customary terms and conditions. The Facility matures in September 2023. Borrowings under the Facility carry an interest rate of either a base rate plus a range of 70 to 140 basis points or LIBOR plus a range of 170 to 240 basis points, each depending on a consolidated leverage ratio. As of September 30, 2019, the Company had $17 million drawn under the Facility and the Facility bore interest at LIBOR (at September 30, 2019, the one-month LIBOR rate was 2.02%) plus 170 bps. In addition, the Company will pay, for the period through and including the calendar quarter ending March 31, 2020, an unused facility fee on the revolving commitments under the Facility of .75% per annum for the first $100 million and .25% per annum for the portion of revolving commitments exceeding $100 million, and for the period thereafter, an unused facility fee of .25% per annum for the aggregate unused revolving commitments, with both periods utilizing calculations of daily unused commitments under the Facility. The Company’s ability to borrow under the Facility is subject to ongoing compliance with a number of customary affirmative and negative covenants. As of September 30, 2019, the Company was in compliance with the Facility’s debt covenants.

(2) 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 $105,661 with the first payable on January 2, 2021 based on a 6% interest rate per annum through January 2, 2025.

Principal payments on debt through maturity are as follows:

Year Ending December 31,	Amount
2019 – Remaining	$	27,409
2020		109,182
2021		191,562
2022		196,553
2023		17,204,951
Thereafter		2,543,254
		20,272,911
Less: Deferred financing costs, net		35,584
Total	$	20,237,327

14

In connection with the IPO, the Company repaid approximately $31.7 million of outstanding indebtedness and wrote off approximately $0.2 million of deferred financing costs which are recorded in loss on extinguishment of debt in the consolidated and combined consolidated statements of operations.

The Vision Bank loan, First Oklahoma Bank loan and Vision Bank – 2018 loan contain a personal guaranty of payment by Mr. Spodek.

6. LOANS PAYABLE – RELATED PARTY

In June 2018, pursuant to a loan modification agreement, interest-only promissory notes aggregating $3,544,215 bearing interest at 1.9% per annum, requiring interest only payments, and maturing between August 1, 2036 through July 1, 2041 were assumed by an affiliate of the Predecessor and recorded as an increase in equity of the Predecessor. Interest expense incurred for these notes was $33,671 for the nine months ended September 30, 2018.

7. OPERATING LEASE AGREEMENTS

At September 30, 2019, all of the properties owned by the Company are leased to a single tenant, the USPS, other than a de-minimis non-postal tenant that shares space in a building leased to the USPS. The leases expire at various dates through January 31, 2028.

Future minimum rental income to be received on non-cancellable leases is as follows:

Year Ending December 31,	Amount
2019 – Remaining	$	2,313,353
2020		8,090,250
2021		6,934,226
2022		4,403,081
2023		3,107,616
Thereafter		4,930,879
Total	$	29,779,405

8. INCOME TAXES

For the three and nine months ended September 30, 2018, in order to determine the quarterly provision for income taxes for UPH, the Company used an estimated annual effective tax rate (“ETR”), which is based on expected annual income and statutory tax rates in the various jurisdictions. Certain significant or unusual items are separately recognized as discrete items in the quarter during which they occur and can be a source of variability in the effective tax rates from quarter to quarter.

Income tax expense (benefit) related to UPH for the three and nine months ended September 30, 2019 was zero and $39,749 at an effective tax rate of 13.4% and $(143,382) and $(83,742) at an effective tax rate of 6.4% for the three and nine months ended September 30, 2018. The effective tax rate for the three and nine months ended September 30, 2019 and September 30, 2018 differs from the statutory rate of 21% due to certain entities included in the consolidated and combined consolidated financial statements that are not subject to tax at the entity level, state taxes and interest and penalties from unrecognized tax benefits primarily related to the utilization of loss carryforwards.

In connection with the IPO, the indirect sole shareholder of UPH agreed to reimburse the Company for unrecognized tax benefits primarily related to the utilization of certain loss carryforwards at UPH. The Company recorded an indemnification asset in the same amount as the unrecognized tax benefits. The amount will be adjusted going forward as new information becomes available in regard to such liability. The indirect sole shareholder of UPH will be responsible for all tax related matters related to UPH. The Company has unrecognized tax benefits at September 30, 2019 of $516,529, which is inclusive of interest and penalties and a corresponding indemnification asset which is recorded in prepaid expenses and other assets on the consolidated balance sheet. During the three months ended September 30, 2019, the Company reversed $191,391 of unrecognized tax benefits and the corresponding indemnification asset due to the expiration of statute of limitations.

In connection with the IPO, the UPH $727,952 deferred tax liability at May 16, 2019 was reversed through equity. Deferred taxes have not been recorded with respect to the Company’s acquired basis differences of UPH due to the Company’s election to be taxed as a REIT in addition to the insignificant state effective tax rate for states that do not conform to federal taxation of REITs.

In connection with the IPO, the Company elected to treat PRM as a TRS which performs management services for properties the Company does not own. PRM generates income, resulting in Federal and state income tax liability for these entities.

For the three and nine months ended September 30, 2019, income tax benefit related to PRM was $6,259 and zero, respectively.

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9. RELATED PARTY TRANSACTIONS

Management Fee Income

Prior to the IPO, the Predecessor recognized management fee income of $249,813 for the three months ended September 30, 2018 and $393,030 and $800,557 for the nine months ended September 30, 2019 and 2018, respectively, from various properties which are affiliated with the Company’s CEO and are included in fee and other income in the consolidated and combined consolidated statements of operations. Following the IPO, PRM recognized management fee income of $236,137 and $365,443, respectively, for the three and nine months ended September 30, 2019 from various properties which are affiliated with the Company’s CEO and are included in fee and other income in the consolidated statements of operations. These amounts include accrued management fees receivable of $16,344 and zero at September 30, 2019 and 2018, respectively, which is included in rents and other receivables on the consolidated and combined consolidated balance sheets.

Related Party Lease

On October 1, 2018, the Predecessor entered into a lease for office space in Cedarhurst, New York with an entity affiliated with the Predecessor (the “Office Lease”). Pursuant to the Office Lease, the monthly rent was $15,000 subject to escalations. The term of the Office Lease was five years commencing on October 1, 2018 (with rent commencing on January 1, 2019) and was set to expire on September 30, 2023. In connection with the IPO, the Office Lease was terminated. On May 17, 2019, the Company entered into a new lease for office space in Cedarhurst, New York with an entity affiliated with the Company’s CEO (the “New Lease”). Pursuant to the New Lease, the monthly rent is $15,000 subject to escalations. The term of the Office Lease is five years commencing on May 17, 2019 and will expire on May 16, 2024. For the nine months ended September 30, 2019, rent expense was $93,626 and was recorded in general and administrative expenses in the consolidated and combined consolidated statements of operations.

As of September 30, 2019, future minimum rental payments on the noncancelable lease is as follows:

Year Ending December 31,	Amount
2019 – Remaining	$	45,000
2020		183,368
2021		188,869
2022		194,535
2023		200,371
Thereafter		76,244
Total	$	888,387

Due to Affiliates

At September 30, 2019, the Company owed $0.5 million to an affiliate of the Company’s CEO for amounts funded in connection with the Company’s IPO (See Note 3. Summary of Significant Accounting Policies).

This amount is non-interest bearing and is due on demand.

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10. EARNINGS PER SHARE

The following table shows the amounts used in computing the Company’s basic and diluted earnings per share. As of the three and nine months ended September 30, 2019, there is no dilution to earnings per share because there is a net loss.

	Three Months Ended September 30, 2019			Nine Months Ended September 30, 2019
Numerator for earnings per share – basic and diluted
Net loss attributable to common stockholders	$	(307,969	)		(699,765	)
Less: income attributable to participating securities		-			(16,715	)
Numerator for earnings per share – basic and diluted	$	(307,969	)	$	(716,480	)
Denominator for earnings per share – basic and diluted	$	5,164,264		$	5,164,264
Basic and diluted earnings per share	$	(0.06	)	$	(0.14	)

11. STOCKHOLDER’S EQUITY

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

Noncontrolling Interests

Noncontrolling interests in the Company primarily represent Common Units held by the Predecessor’s prior investors and LTIP Units issued to the Company’s CEO in connection with the IPO and in lieu of cash compensation. During the three months ended September 30, 2019, the Company issued 5,298 LTIP Units to an employee. Noncontrolling interests consisted of 1,333,112 Common Units and 120,004 LTIP Units and represented approximately 21.5% of the Operating Partnership as of September 30, 2019. Operating Partnership units and shares of common stock have essentially the same economic characteristics, as they share equally in the total net income or loss distributions of the Operating Partnership. Beginning on or after the date which is 12 months after the later of (i) the completion of the IPO or (ii) the date on which a person first became a holder of common units, each limited partner and assignees of limited partners will have the right, subject to the terms and conditions set forth in the partnership agreement to require the Operating Partnership to redeem all or a portion of the Common Units held by such limited partner or assignee in exchange for shares of the Company’s Class A Common Stock, on a one-for-one basis, or, at the Company’s sole discretion, cash, in an amount per Common Unit equal to the value of one share of Class A Common Stock, determined in accordance with and subject to adjustment under the partnership agreement. The Operating Partnership unitholders are entitled to share in cash distributions from the Operating Partnership in proportion to its percentage ownership of Common Units.

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Restricted Stock and Other Awards

Pursuant to the Company’s 2019 Equity Incentive Plan, or Equity Incentive Plan, the Company may grant equity incentive awards to our directors, officers, employees and consultants. Upon completion of the IPO, the Company issued 73,529 LTIP units to the Company’s CEO, 58,824 restricted shares of Class A Common Stock to the Company’s president, 33,824 restricted shares of Class A Common Stock to other employees and 38,235 restricted shares of Class A Common Stock to the Company’s non-employee directors under the Equity Incentive Plan. In addition, the Company issued 41,177 LTIP Units to the Company’s CEO and an aggregate of 17,647 restricted shares of Class A Common Stock to its non-employee directors, in each case in lieu of cash compensation for the twelve month period following completion of the IPO. During the quarter ended September 30, 2019, the Company issued an aggregate 5,298 LTIP Units and 317 restricted shares of Class A Common Stock to certain employees. The maximum number of shares of Class A Common Stock that is available to be issued under our Equity Incentive Plan is 541,584 shares. To the extent an award granted under the Equity Incentive Plan expires or terminates, the shares subject to any portion of the award that expires or terminates without having been exercised or paid, as the case may be, will again become available for the issuance of additional awards.

Awards issued in connection with the IPO will vest in three equal, annual installments on each of the first three anniversaries of the date of grant. Awards issued to the Company’s non-employee directors in lieu of cash compensation vest on the anniversary of the grant and awards issued as equity compensation vest in three equal, annual installments on each of the first three anniversaries of the date of grant. Awards issued to the Company’s CEO in lieu of cash compensation cliff vest on the eighth anniversary of the date of grant. For the three and nine months ended September 30, 2019, the Company recognized compensation expenses of $0.4 million and $0.6 million related to all awards, respectively. As of September 30, 2019, there was $4.0 million of total unrecognized compensation cost related to unvested awards, which is expected to be recognized over a weighted average period of 3.6 years.

Employee Stock Purchase Plan

In connection with the IPO, the Postal Realty Trust, Inc. 2019 Qualified Employee Stock Purchase Plan, or the ESPP, allows the Company’s employees to purchase shares of the Company’s Class A Common Stock at a discount. A total of 100,000 shares of Class A common stock will be reserved for sale and authorized for issuance under the ESPP. The Code permits us to provide up to a 15% discount on the lesser of the fair market value of such shares of stock at the beginning of the offering period and the code of the offering period. No shares have been purchased as of September 30, 2019.

12. COMMITMENTS AND CONTINGENCIES

At September 30, 2019, the Company was not involved in any litigation nor to its knowledge is any litigation threatened against the Predecessor or the Company, as applicable, that, in management’s opinion, would result in any material adverse effect on the Company’s financial position, or which is not covered by insurance.

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

13. SUBSEQUENT EVENTS

On October 30, 2019, the Company borrowed an additional $20 million under the Facility.

In October 2019, the Company, through its Operating Partnership, acquired 55 properties leased to the USPS located in various states for approximately $9.5 million. In November 2019, the Company, through its Operating Partnership, acquired 22 properties leased to the USPS located in various states for approximately $7.8 million.

As of November 11, 2019, the Company entered into definitive agreements to acquire 98 properties leased to the USPS for approximately $27.6 million, which includes $14.0 million in OP Units valued at $17.00 per unit. Formal due diligence has been completed and the transactions are expected to close in the fourth quarter, subject to the satisfaction of customary closing conditions. 

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion of the financial condition and results of operations should be read in conjunction with the unaudited consolidated and combined consolidated financial statements and related notes thereto of the Company and the Company’s accounting Predecessor (the “Predecessor”) for the period ended September 30, 2019 and the Predecessor for the period ended September 30, 2018, included in “Part I, Item 1. Financial Statements” in this Quarterly Report on Form 10-Q (this “Quarterly Report”).

References to “we,” “our,” “us,” and “the Company” refer to Postal Realty Trust, Inc., a Maryland corporation, together with our consolidated subsidiaries, including Postal Realty LP, a Delaware limited partnership (our “Operating Partnership”), of which we are the sole general partner and which we refer to in this Quarterly Report as our “Operating Partnership.”

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

Forward-Looking Statements

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

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

● defaults on, early terminations of or non-renewal of leases by the United States Postal Service (the “USPS”);

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

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

● the solvency and financial health of the USPS;

● the competitive environment in which we operate;

● 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;

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● our failure to successfully operate developed and acquired properties;

● fluctuations in mortgage rates and increased operating costs;

● general economic conditions;

● financial market fluctuations;

● lack or insufficient amounts of insurance;

● conflicts of interests with our officers and/or directors;

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

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

● difficulties in identifying or completing acquisition opportunities;

● other factors affecting the real estate industry generally;

● our failure to qualify and maintain our qualification as a real estate investment trust (“REIT”) for federal income tax purposes;

● limitations imposed on our business and our ability to satisfy complex rules in order for us to qualify as a REIT for federal income tax purposes; and

● changes in governmental regulations or interpretations thereof, such as real estate and zoning laws and increases in real property tax rates and taxation of REITs.

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, 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.

Overview

The Company

We were formed as a Maryland corporation on November 19, 2018 and commenced operations upon completion of our IPO on May 17, 2019 and the related formation transactions (the “Formation Transactions”). We conduct our business through a traditional UPREIT structure in which our properties are owned by our Operating Partnership directly or through limited partnerships, limited liability companies or other subsidiaries. At the completion of our IPO and the Formation Transactions, we owned and managed a portfolio of 271 postal properties located in 41 states comprising approximately 872,000 net leasable interior square feet, all of which were leased to the USPS. In the quarter ended September 30, 2019, we acquired 18 properties leased to the USPS for approximately $11.1 million. In October and November 2019, we acquired 77 properties leased to the USPS for approximately $17.3 million. As of November 11, 2019, we own a portfolio of 366 postal properties located in 43 states comprising approximately 1,200,000 net leasable interior square feet.

We are the sole general partner of our Operating Partnership through which our postal properties are directly or indirectly owned. As of November 11, 2019, we own approximately 78.5% of the outstanding common units of limited partnership interest in the Operating Partnership (“OP Units”). Our Board oversees our business and affairs.

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

The Company elected to be taxed as an S-Corporation under the Internal Revenue Code of 1986, as amended (the “Code”), effective November 19, 2018, and as such, all federal tax liabilities were the responsibility of the Company’s sole stockholder until the completion of our IPO. In anticipation of the IPO, the Company revoked its S-Corporation election on May 14, 2019. The Company intends to qualify and elect to qualify as a REIT under the Code beginning with its short taxable year ending December 31, 2019. As a REIT, the Company generally will not be subject to federal income tax to the extent that it distributes at least 90% of its taxable income for each tax year to its stockholders. REITs are subject to a number of organizational and operational requirements.

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 intend to avail 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 $1.07 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 of the 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.”

Factors That May Influence Future Results of Operations

The USPS

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

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

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Revenues

We derive revenues primarily from rent and tenant reimbursements under leases with the USPS for our properties, and fee and other income under the management agreements with respect to the postal properties owned by Mr. Spodek, his family members and their partners managed by PRM, our taxable REIT subsidiary. Rent income represents the lease revenue recognized under leases with the USPS. Tenant reimbursements represent payments made by the USPS under the leases to reimburse us for real estate taxes paid at each property. Fee and other income principally represent revenue PRM receives from postal properties owned by Mr. Spodek, his family members and their partners pursuant to the management agreements and typically is a percentage of the lease revenue for the managed property. As of September 30, 2019, all properties leased to the USPS had an average remaining lease term of three years. Factors that could affect our rent income, tenant reimbursement and fee and other income in the future include, but are not limited to: (i) our ability to renew or replace expiring leases and management agreements; (ii) local, regional or national economic conditions; (iii) an oversupply of, or a reduction in demand for, post office space; (iv) changes in market rental rates; (v) changes to the USPS’s current property leasing program or form of lease; and (vi) our ability to provide adequate services and maintenance at our properties and managed properties.

Operating Expenses

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

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

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

General and Administrative

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

Depreciation and Amortization

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

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Indebtedness and Interest Expense

Interest expense for the Predecessor related primarily to three mortgage loans payable and related party interest-only promissory notes, which are described under Note 5. Mortgage Loans Payable and Note 6. Loans Payable — Related Party in the notes to the Predecessor’s financial statements. As a result of the Formation Transactions, we assumed certain indebtedness of the Predecessor, a portion of which was repaid without penalty using a portion of the net proceeds from our IPO. On September 27, 2019, we entered into a $100.0 million senior revolving credit facility (the “Facility”) with People’s United Bank, individually and as administrative agent, BMO Capital Markets Corp., as syndication agent, and certain other lenders. We intend to use the revolving credit facility for working capital purposes, which may include repayment of indebtedness, property acquisitions and other general corporate purposes. Consistent with the method adopted by our Predecessor, we amortize on a non-cash basis the deferred financing costs associated with its debt to interest expense using the straight-line method, which approximates the effective interest rate method over the terms of the related loans. Any changes to the debt structure, including debt financing associated with property acquisitions, could materially influence the operating results depending on the terms of any such indebtedness.

Income Tax Benefit (Expense)

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

Critical Accounting Policies and Estimates

Refer to the heading titled “Critical Accounting Policies and Estimates” in Company’s final prospectus dated May 14, 2019 for a discussion of our critical accounting policies and estimates of the Predecessor and the Company, as applicable. During the nine months ended September 30, 2019, there were no material changes to these policies, other than the adoption of the Accounting Standards Codification Topic 606, Revenue from Contracts with Customers, described in Note 2. Significant Accounting Policies to the unaudited consolidated and combined consolidated financial statements in Part I, Item 1 of this Quarterly Report.

Results of Operations

The three months ended September 30, 2019 represents the consolidated results of the Company. The nine months ended September 30, 2019 represents the period beginning on May 17, 2019, the closing date of our IPO, and ending on September 30, 2019, and the combined results of the Predecessor for the period beginning on January 1, 2019 and ending on May 16, 2019, the day immediately preceding the closing date of our IPO. The comparable three and nine-month periods in 2018 pertain to the combined results of the Predecessor only and accordingly, may not be directly comparable due to the impact of our IPO and the Formation Transactions on May 17, 2019. For the period beginning on May 17, 2019 and ending on September 30, 2019, the Company incurred a loss of $0.9 million, which includes $0.2 million of loss on early extinguishment of debt and $0.6 million of equity-based compensation. In the forthcoming comparison, we have highlighted the impact of our IPO and the Formation Transactions where applicable.

As a result of the completion of our IPO and the Formation Transactions, as of September 30, 2019 we currently own and manage a portfolio of 289 postal properties located in 43 states comprising approximately 984,000 net leasable interior square feet and through PRM, we provide fee-based third party property management services for an additional 403 postal properties and owned by Mr. Spodek and his family members and their partners.

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Comparison of the Three Months Ended September 30, 2019 and the Three Months Ended September 30, 2018

The following discussion includes the results of the operations of the Company and Predecessor, as applicable, as summarized in the table below:

				Predecessor
	Three months ended September 30, 2019			Three months ended September 30, 2018			% Change
Revenues
Rent income	$	2,387,082		$	1,417,534			68.4	%
Tenant reimbursements		342,419			220,676			55.2	%
Fee and other income		278,846			255,971			8.9	%
Total revenues		3,008,347			1,894,181			58.8	%
Operating expenses
Real estate taxes		353,663			227,373			55.5	%
Property operating expenses		332,892			203,994			63.2	%
General and administrative		1,207,197			282,361			327.5	%
Equity - based compensation		394,530			-			NA
Depreciation and amortization		1,066,338			457,907			132.9	%
Total operating expenses		3,354,620			1,171,635			186.3	%
Income (loss) from operations		(346,273	)		722,546			(147.9	)%
Interest expense, net:
Contractual interest expense		(48,916	)		(361,743	)		86.5	%
Amortization of deferred financing costs		(4,523	)		(3,126	)		(44.7	)%
Interest income		1,136			1,158			(1.9	)%
Total interest expense, net		(52,303	)		(363,711	)		(85.6	)%
Income (loss) before income tax (expense) benefit		(398,576	)		358,835			(211.1	)%
Income tax (expense) benefit		6,259			143,382			(95.6	)%
Net income (loss)	$	(392,317	)	$	502,217			(178.1	)%

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For the three months ended September 30, 2019 and September 30, 2018, approximately 90.7% and 86.5%, respectively, of the Company’s total revenues were attributable to rental revenue and tenant reimbursements under long-term leases with the USPS, with the balance of total revenues in each year consisting of fee and other income as described below. Total revenues increased by $1,114,166, or 58.8%, to $3,008,347 for the three months ended September 30, 2019 from $1,894,181 for the three months ended September 30, 2018, primarily due to the acquisition of 81 properties in connection with the Formation Transactions and 18 properties in the quarter ended September 30, 2019.

Rent income. Rent income increased by $969,548, or 68.4%, to $2,387,082 for the three months ended September 30, 2019 from $1,417,534 for the three months ended September 30, 2018, primarily due to the acquisition of 81 properties in connection with the Formation Transactions and 18 properties in the quarter ended September 30, 2019.

Tenant reimbursements. Tenant reimbursements increased by $121,743, or 55.2%, to $342,419 for the three months ended September 30, 2019 from $220,676 for the three months ended September 30, 2018, primarily due to the acquisition of 81 properties in connection with the Formation Transactions and 18 properties in the quarter ended September 30, 2019.

Fee and other income. Other revenue increased by $22,875, or 8.9%, to $278,846 for the three months ended September 30, 2019 from $255,971 for the three months ended September 30, 2018, primarily due to higher insurance recoveries and miscellaneous income for the three months ended September 30, 2019, offset by lower management fees.

Expenses

Real estate taxes. Real estate taxes increased by $126,290, or 55.5%, to $353,663 for the three months ended September 30, 2019 from $227,373 for the three months ended September 30, 2018, primarily due to the acquisition of 81 properties in connection with the Formation Transactions and 18 properties in the quarter ended September 30, 2019.

Property operating expenses. Property operating expenses includes $185,077 and $155,473 of property management expenses for the three months ended September 30, 2019 and 2018, respectively. Property operating expenses increased by $128,898, or 63.2%, to $332,892 for the three months ended September 30, 2019 from $203,994 for the three months ended September 30, 2018, primarily due to the acquisition of 81 properties in connection with the Formation Transactions and 18 properties in the quarter ended September 30, 2019.

General and administrative. General and administrative expenses increased by $924,836, or 327.5%, to $1,207,197 for the three months ended September 30, 2019 from $282,361 for the three months ended September 30, 2018, primarily due to higher professional fees, increased personnel and investor relations expenses as a result of being a public company.

Equity-based compensation. Equity-based compensation increased $394,530 primarily due to the stock awards issued in connection with the IPO.

Depreciation and amortization. Depreciation and amortization expense increased by $608,431, or 132.9%, to $1,066,338 for the three months ended September 30, 2019 from $457,907 for the three months ended September 30, 2018, primarily due to the acquisition of 81 properties in connection with the Formation Transactions and 18 properties in the quarter ended September 30, 2019.

Interest expense, net. Interest expense, net decreased by $311,408, or 85.6%, to $52,303 for the three months ended September 30, 2019 from $363,711 for the three months ended September 30, 2018, primarily due to reduced contractual interest expense in connection with the repayment of indebtedness in connection with the IPO.

Income tax (expense) benefit. Income tax benefit decreased by $137,123, or 95.6%, to $6,259 for the three months ended September 30, 2019 from $143,382 for the three months ended September 30, 2018, primarily due to the Company’s election to be taxed as a REIT.

Net income (loss). Net income (loss) decreased by $894,534, or 178.1%, to $(392,317) for the three months ended September 30, 2019 from $502,217 for the three months ended September 30, 2018, primarily due to higher general and administrative expenses as a result of being a public company and equity-based compensation.

25

Comparison of the Nine Months Ended September 30, 2019 and the Nine Months Ended September 30, 2018

The following discussion includes the results of the operations of the Company and Predecessor, as applicable, as summarized in the table below:

	Postal Realty Trust, Inc.			Predecessor
	Nine Months Ended September 30, 2019			Nine Months Ended September 30, 2018			% Change
Revenues:
Rent income	$	5,735,896		$	4,199,767			36.6	%
Tenant reimbursements		852,504			668,502			27.5	%
Fee and other income		842,097			862,317			(2.3	)%
Total revenues		7,430,497			5,730,586			29.7	%
Operating Expenses:
Real estate taxes		880,117			688,953			27.7	%
Property operating expenses		821,839			639,289			28.6	%
General and administrative		2,385,228			1,086,384			119.6	%
Equity-based compensation		584,873			-			NA
Depreciation and amortization		2,314,553			1,363,575			69.7	%
Total operating expenses		6,986,610			3,778,201			84.9	%
Income from operations		443,887			1,952,385			(77.3	)%
Interest expense, net:
Contractual interest expense		(635,423	)		(1,112,353	)		(42.9	)%
Amortization of deferred financing costs		(9,558	)		(9,375	)		2.0	%
Loss on early extinguishment of Predecessor debt		(185,586	)		-			NA
Interest income		3,394			3,370			0.7	%
Total interest expense, net		(827,173	)		(1,118,358	)		(26.0	)%
Income (loss) before income tax (expense) benefit		(383,286	)		834,027			(146.0	)%
Income tax (expense) benefit		(39,749	)		83,742			(147.5	)%
Net income (loss)	$	(423,035	)	$	917,769			(146.1	)%

For the nine months ended September 30, 2019 and September 30, 2018, approximately 88.7% and 85.0%, respectively, of the Company’s total revenues were attributable to rental revenue and tenant reimbursements under long-term leases with the USPS, with the balance of total revenues in each year consisting of fee and other income as described below. Total revenues increased by $1,699,911, or 29.7%, to $7,430,497 for the nine months ended September 30, 2019 from $5,730,586 for the nine months ended September 30, 2018, primarily due to the acquisition of 81 properties in connection with the Formation Transactions and 18 properties in the third quarter of 2019.

Rent income. Rent income increased by $1,536,129, or 36.6%, to $5,735,896 for the nine months ended September 30, 2019 from $4,199,767 for the nine months ended September 30, 2018, primarily due to the acquisition of 81 properties in connection with the Formation Transactions and 18 properties in the third quarter of 2019.

Tenant reimbursements. Tenant reimbursements increased by $184,002, or 27.5%, to $852,504 for the nine months ended September 30, 2019 from $668,502 for the nine months ended September 30, 2018, primarily due to the acquisition of 81 properties in connection with the Formation Transactions and 18 properties in the third quarter of 2019.

Fee and other income. Other revenue decreased by $20,220, or 2.3%, to $842,097 for the nine months ended September 30, 2019 from $862,317 for the nine months ended September 30, 2018, primarily due to lower management fees and insurance recoveries for the nine months ended September 30, 2019 offset by an increase in miscellaneous income.

26

Expenses

Real estate taxes. Real estate taxes increased by $191,164, or 27.7%, to $880,117 for the nine months ended September 30, 2019 from $688,953 for the nine months ended September 30, 2018, primarily due to the acquisition of 81 properties in connection with the Formation Transactions and 18 properties in the third quarter of 2019.

Property operating expenses. Property operating expenses includes $514,223 and $460,432 of property management expenses for the nine months ended September 30, 2019 and 2018, respectively. Property operating expenses increased by $182,550, or 28.6%, to $821,839 for the nine months ended September 30, 2019 from $639,289 for the nine months ended September 30, 2018, primarily due to the acquisition of 81 properties in connection with the Formation Transactions and 18 properties in the third quarter of 2019.

General and administrative. General and administrative expenses increased by $1,298,844, or 119.6%, to $2,385,228 for the nine months ended September 30, 2019 from $1,086,384 for the nine months ended September 30, 2018 primarily due to higher professional fees, increased personnel and investor relations expenses as a result of being a public company.

Equity-based compensation. Equity-based compensation increased $584,873 primarily due to the stock awards issued in connection with the IPO.

Depreciation and amortization. Depreciation and amortization expense increased by $950,978, or 69.7%, to $2,314,553 for the nine months ended September 30, 2019 from $1,363,575 for the nine months ended September 30, 2018, primarily due to the acquisition of 81 properties in connection with the Formation Transactions and 18 properties in the quarter ended September 30, 2019.

Interest expense net. Interest expense, net decreased by $291,185, or 26.0%, to $827,173 for the nine months ended September 30, 2019 from $1,118,358 for the nine months ended September 30, 2018, primarily due to loss on extinguishment of debt as a result of the repayment of Predecessor debt offset by lower contractual interest as a result of such repayment.

Income tax (expense) benefit. Income tax benefit decreased by $123,491, or 147.5%, to $(39,749) for the nine months ended September 30, 2019 from $83,742 for the nine months ended September 30, 2018 due to the Company’s election to be taxed as a REIT.

Net income (loss). Net income (loss) decreased by $1,340,804, or 146.1%, to $(423,035) for the nine months ended September 30, 2019 from $917,769 for the nine months ended September 30, 2018 primarily due to higher general and administrative expenses, equity-based compensation and the loss on the extinguishment of debt.

Non-GAAP Financial Measures

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

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

We calculate AFFO by starting with FFO and adjusting for recurring capital expenditures (defined as all capital expenditures that are recurring in nature, excluding capital improvements that are incurred in connection with the acquisition of a property or obtaining a lease or lease renewal) and acquisition expenses that are not capitalized and then adding back non-cash items including: non-real estate depreciation, loss on extinguishment of debt, straight-lined rents and fair value lease adjustments and non-cash components of compensation expense. AFFO is a non-GAAP financial measure and should not be viewed as an alternative to net income calculated in accordance with GAAP as a measurement of our operating performance. We believe that AFFO is widely-used by other REITs and is helpful to investors as a meaningful additional measure of our ability to make capital investments. Other REITs may not define AFFO in the same manner as we do and therefore our calculation of AFFO may not be comparable to such other REITs.

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

27

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

	Three months ended September 30, 2019
Net income (loss)	$	(392,317	)
Depreciation and amortization of real estate assets		1,066,338
FFO	$	674,021
Recurring capital expenditures		(31,417	)
Acquisition related expenses		82,065
Amortization of debt issuance costs		4,523
Straight-line rent adjustments		(5,041	)
Amortization of above and below market leases		(135,948	)
Non-cash stock compensation expense		394,530
AFFO	$	982,733

Analysis of Liquidity and Capital Resources

As of September 30, 2019, the Company had approximately $11.0 million of cash, and as of November 11, 2019, the Company has approximately $13.3 million of cash.

Our Facility matures in September 2023. Borrowings under our facility carry an interest rate of either a base rate plus a range of 70 to 140 basis points or LIBOR plus a range of 170 to 240 basis points, each depending on a consolidated leverage ratio. As of September 30, 2019, we had $17.0 million outstanding under our facility. We intend to use our Facility for working capital purposes, which may include repayment of indebtedness, property acquisitions and other general corporate purposes.

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 and cash equivalents, mortgage financing and borrowings under our Facility.

Our long-term liquidity requirements primarily consist of funds necessary for the repayment of debt at maturity, property acquisitions and non-recurring capital improvements. We expect to meet our long-term liquidity requirements with net cash from operations, long-term secured and unsecured indebtedness including our Facility and mortgage financing, the issuance of equity and debt securities and proceeds from select sales of our properties. We also may fund property acquisitions and non-recurring capital improvements using our Facility pending permanent 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. See “Federal Income Tax Considerations—Taxation of Our Company—Distribution Requirements” in our Registration Statement for more information. 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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Secured borrowings as of September 30, 2019

As of September 30, 2019, the Company had approximately $3.3 million of secured borrowings outstanding combined indebtedness, none of which was variable rate debt. Historically, our Predecessor’s equity capital was principally provided by Mr. Spodek as the majority equity owner of the Predecessor entities and its debt capital was principally provided through first mortgage loans on the properties owned by the Predecessor and promissory notes payable to related parties. Following the completion of our IPO and the Formation Transactions, we repaid approximately $31.7 million of indebtedness of the Predecessor using a portion of the net proceeds from our IPO. We believe that the completion of our IPO improved our financial position by reducing our outstanding indebtedness and providing us various sources of financing that would not have been available to us as a privately owned company.

Secured Borrowings Repaid in Connection with Our IPO

At the completion of our IPO, our Operating Partnership used a portion of the net proceeds therefrom to repay approximately $31.7 million of secured borrowings that we assumed in the Formation Transactions. During the quarter ended September 30, 2019, we obtained seller financing in the amount of $0.4 million in connection with the purchase of a property. As a result, we had approximately $3.3 million of secured borrowings outstanding at September 30, 2019, with a weighted average interest rate of 4.6% per annum, all of which is fixed rate debt.

The following table sets forth information as of September 30, 2019 with respect to the indebtedness of the Predecessor that was repaid with the net proceeds from our IPO:

	Amount Outstanding at September 30, 2019		Amount Repaid		Interest Rate	Maturity Date
Vision Bank	$	1,538,330	$	13,825,901	4.0%, Prime + 0.5% (1,2)	September 2036
Atlanta Postal Credit Union		-		17,117,032	4.15%	September 2021
First Oklahoma Bank		381,391		-	4.5%, Prime + 0.25% (1,3)	December 2037
Vision Bank—2018		908,190		-	5.0%, Prime + 0.5% (1,4)	January 2038
Seller Financing		445,000		-	6.0%	January 2025
First Oklahoma Bank—2018		-		739,622	5.5%, Prime (1)	October 2043
Total	$	3,272,911	$	31,682,555

(1) Prime refers to the Wall Street Journal Prime Rate.

(2) Interest rate resets on September 8, 2021.

(3) Interest rate resets on December 31, 2022.

(4) Interest rate resets on January 31, 2023.

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The following discussion relates to secured borrowings of the Company as of September 30, 2019.

Vision Bank Loan. The loan from Vision Bank in the aggregate principal amount of approximately $16.9 million requires monthly payments of principal based on a 30-year amortization schedule, plus interest at 4.0% per annum through September 2021, after which the interest rate will reset at a variable rate equal to the Wall Street Journal prime rate, plus 0.5%. The Vision Bank mortgage loan matures on September 8, 2036, at which time all accrued interest and unpaid principal are due. The loan was collateralized by first mortgage liens on 26 properties and a personal guarantee of payment by Mr. Spodek. On May 17, 2019, our Operating Partnership used a portion of the net proceeds from our IPO to repay approximately $13.8 million of outstanding indebtedness under the Vision Bank loan and the loan is now collateralized by first mortgage loans on five properties. As of September 30, 2019, approximately $1.5 million was outstanding under the Vision Bank loan.

First Oklahoma Bank Mortgage Loan. In December 2017, the Predecessor entered into a mortgage loan payable with First Oklahoma Bank in the original amount of $404,000 requiring monthly payments of principal and interest of $2,570 based on a 20-year amortization schedule, and interest at 4.5% per annum through December 31, 2022, after which the interest rate will reset to a variable rate equal to the Wall Street Journal prime rate, plus 0.25%. The mortgage loan matures on December 13, 2037, at which time all accrued interest and unpaid principal are due. This mortgage loan is collateralized by first mortgage liens on four properties and a personal guarantee of payment by Mr. Spodek. As of September 30, 2019, approximately $0.4 million was outstanding under the First Oklahoma Bank mortgage loan.

Vision Bank – 2018. In January 2018, the Predecessor entered into a mortgage loan with Vision Bank in the principal amount of $960,000 requiring monthly payments of principal and interest of $6,374 based on a 20-year amortization schedule, and interest at 5.0% per annum through January 31, 2023, after which the interest rate will reset to a variable rate equal to the Wall Street Journal prime rate, plus 0.5%. The mortgage loan matures on January 31, 2038, at which time all accrued interest and unpaid principal are due. This mortgage loan is collateralized by a first mortgage lien on one property and a personal guaranty of payment by Mr. Spodek. As of September 30, 2019, approximately $0.9 million was outstanding under the Vision Bank – 2018 loan.

Seller Financing. In July 2019, the Company entered into a purchase money mortgage with the seller of the property in the principal amount of $445,000 requiring five annual payments of principal and interest of $105,661 with the first payable on January 2, 2021 based on a 6.0% interest rate per annum through January 2, 2025. This purchase money note is collateralized by a purchase money mortgage of real estate. As of September 30, 2019, approximately $0.4 million was outstanding under seller financing.

None of the indebtedness that our Operating Partnership repaid upon completion of our IPO and the Formation Transactions had any prepayment penalties in connection with repayment prior to maturity.

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Cash Flows

Comparison of the nine months ended September 30, 2019 and the nine months ended September 30, 2018

The Company had cash of $10,969,557 and $498,379 as of September 30, 2019 and September 30, 2018, respectively.

The Company’s net cash provided by operating activities decreased by $123,397, or 5.5%, to $2,100,898 for the nine months ended September 30, 2019 from $2,224,290 for the nine months ended September 30, 2018 due to lower net income on account of increased general and administrative expenses resulting from being a publicly traded company.

The Company’s net cash used in investing activities increased by $38,013,771, or 2,663.7%, to $39,440,887 for the nine months ended September 30, 2019 from $1,427,116 for the nine months ended September 30, 2018, primarily due to the acquisition of 81 post office properties in connection with the Formation Transactions and 18 properties in the quarter ended September 30, 2019.

The Company’s net cash provided by (used in) financing activities increased by $48,525,598, or 10,374.8%, to $48,057,871 for the nine months ended September 30, 2019 from $(467,727) for the nine months ended September 30, 2018, primarily due to the net proceeds from the IPO and borrowings under our Facility offset by the repayment of debt in connection with the IPO.

Acquisition Pipeline

As of November 11, 2019, the Company entered into definitive agreements to acquire 98 properties leased to the USPS for approximately $27.6 million, which includes $14.0 million in OP Units valued at $17.00 per unit. The properties comprise square feet with an average rental rate of $8.93 per square foot. Formal due diligence has been completed and the transactions are expected to close by the end of the year, subject to the satisfaction of customary closing conditions.

We continue to identify, and are in various stages of reviewing, additional postal properties for acquisition and believe there are strong opportunities to continue growing our pipeline.

Off-Balance Sheet Arrangements

As of September 30, 2019, we did not have any off-balance sheet arrangements.

Inflation

Because most of our leases provide for fixed annual rent payments without annual rent escalations, our rent 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 over time inflationary increases in expenses will be reflected in increased lease renewal rent rates.

Recent Developments

On October 30, 2019, the Company borrowed an additional $20 million under the Facility.

On November 5, 2019, the board of directors of the Company approved and the Company declared a cash dividend of $0.14 per share and common unit for the quarter ended September 30, 2019. The dividend will be paid on December 2, 2019 to stockholders and common unitholders of record as of the close of business on November 15, 2019 consisting of $0.7 million in dividends to stockholders and $0.2 million to common unitholders.

In October and November 2019, the Company, through its Operating Partnership, acquired 77 properties leased to the USPS located in various states for approximately $17.3 million. The properties comprise approximately 172,000 square feet with an average rental rate of $9.58 per square foot.

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Item 3. Quantitative and Qualitative Disclosures about Market Risk

Not applicable.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

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

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

Changes in Internal Control Over Financial Reporting

We continue to execute on our plan to remedy the material weakness, described in the Company’s final prospectus dated May 14, 2019, including (i) initiating a full internal review and evaluation of key processes, procedures and documentation and related control procedures, and the subsequent testing of those controls, (ii) hiring additional accounting resources, including our Chief Accounting Officer, Matt Brandwein, who joined us in January 2019, with the appropriate level of technical experience and training in the application of technical accounting guidance to non-routine and complex transactions in order to properly analyze, review, record and report on business transactions and (iii) implementing policies and procedures focusing on enhancing the review and approval of all relevant data to support our assumptions and judgments in non-routine and complex transactions appropriately and timely and documenting such review and approval. We also have made organizational changes and trained our employees in order to strengthen and improve our internal controls over financial reporting.

Management believes that these measures will remediate the previously identified material weakness. While we have completed our initial testing of these new controls and have concluded they are in place and operating as designed, we are monitoring their ongoing effectiveness, and will consider the material weakness remediated after the applicable remedial controls operate effectively for an additional period of time.

Except as otherwise stated above, there was no change in our internal control over financial reporting that occurred during the period covered by this report that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

32

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” of our final prospectus dated May 14, 2019.

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

On May 17, 2019, we closed our IPO, pursuant to which we sold 4,500,000 shares of our Class A Common Stock to the public at a public offering price of $17 per share. We raised $76.5 million in gross proceeds, resulting in net proceeds to us of approximately $71.1 million after deducting approximately $5.4 million in underwriting discounts and before giving effect to $6.4 million in other expenses relating to the IPO. All 4,500,000 shares of our Class A Common Stock were sold pursuant to our registration statement on Form S-11, as amended (File No. 333-230684), that was declared effective by the SEC on May 14, 2019. Stifel, Nicolaus & Company, Incorporated, Janney Montgomery Scott LLC, BMO Capital Markets Corp. and Height Capital Markets, LLC served as bookrunning managers for the offering and as representatives of the several underwriters.

In connection with the closing of our IPO and the Formation Transactions and pursuant to certain merger and contribution agreements, we issued to (i) Mr. Spodek an aggregate of (a) 637,058 shares of our Class A Common Stock with an aggregate value of approximately $10.8 million based on the IPO price and (b) 27,206 shares of our Class B Common Stock with an aggregate value of approximately $0.5 million based on the IPO price, and (ii) Mr. Spodek and his affiliates an aggregate of 1,333,112 OP Units with an aggregate value of approximately $22.7 million based on the IPO price. The issuance of such shares and OP Units, as applicable, was effected in reliance upon exemptions from registration provided by Section 4(a)(2) of the Securities Act and Regulation D of the Securities Act. Pursuant to the limited partnership agreement of our Operating Partnership and subject to the requirements and restrictions set forth therein, limited partners of our Operating Partnership will have the right, commencing one year from the date of issuance of such units, to require our Operating Partnership to redeem part or all of their OP Units in exchange for cash or, at our Operating Partnership’s option, for shares of our Class A Common Stock on a one-for-one basis.

There has been no material change in our planned use of proceeds from our IPO as described in the final prospectus filed with the SEC on May 16, 2019.

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

None.

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Item 6. Exhibits

Exhibit	Exhibit Description
10.1+*	Agreement of Purchase and Sale by and among Postal Realty LP and Hugh B. Barwick, Jr., Gary L. Poelstra and Nancy B. Ordway, dated July 16, 2019
10.2+*	Agreement of Purchase and Sale by and among Postal Realty LP and Hugh B. Barwick, Jr., Benjamin C. Barwick and Gary L. Poelstra, dated July 16, 2019
10.3+*	Agreement of Purchase and Sale by and between Postal Realty LP and Coharie, Incorporated dated July 16, 2019
10.4+*	Agreement of Purchase and Sale by and between Postal Realty LP and HB Barwick, Inc. dated July 16, 2019
10.5+*	Agreement of Purchase and Sale by and among Postal Realty LP and Hugh B. Barwick, Jr. dated July 16, 2019
31.1*	Certification of Chief Executive Officer furnished pursuant to Section 302 of the Sarbanes Oxley Act of 2002
31.2*	Certification of President, Treasurer and Secretary furnished pursuant to Section 302 of the Sarbanes Oxley Act of 2002
32.1*	Certification of Chief Executive Officer furnished pursuant to Section 906 of the Sarbanes Oxley Act of 2002
32.2*	Certification of President, Treasurer and Secretary furnished pursuant to Section 906 of the Sarbanes Oxley Act of 2002
101.INS	INSTANCE DOCUMENT**
101.SCH	SCHEMA DOCUMENT**
101.CAL	CALCULATION LINKBASE DOCUMENT**
101.LAB	LABELS LINKBASE DOCUMENT**
101.PRE	PRESENTATION LINKBASE DOCUMENT**
101.DEF	DEFINITION LINKBASE DOCUMENT**

* Exhibits filed with this report.

+ Certain portions of this Exhibit have been redacted to preserve confidentiality. The registrant hereby undertakes to provide further information regarding such redacted information to the Commission upon request.

** 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; (iii) Consolidated Statements of Equity; (iv) Consolidated Statements of Cash Flows; and (v) Notes to Consolidated Financial Statements.

34

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: November 12, 2019	By:	/s/ Andrew Spodek
		Andrew Spodek
		Chief Executive Officer
		(Principal Executive Officer)
Date: November 12, 2019	By:	/s/ Jeremy Garber
		Jeremy Garber
		President, Treasurer and Secretary
		(Principal Financial Officer)

35

EX-10.1

Exhibit 10.1

EXECUTION VERSION

*Certain identified information has been excluded from this exhibit because it is
both (i) not material and (ii) would be competitively harmful if publicly disclosed.
The redacted confidential portions of the exhibit are marked by [***].

AGREEMENT OF PURCHASE AND SALE

BY AND AMONG

POSTAL REALTY LP

and

HUGH B. BARWICK, JR., GARY L. POELSTRA and NANCY B. ORDWAY

Dated: July 16, 2019

AGREEMENT OF PURCHASE AND SALE

This AGREEMENT OF PURCHASE AND SALE (this “Agreement”), is made and entered into this 16^th day of July, 2019 (the “Effective Date”), by and among Hugh B. Barwick, Jr., Gary L. Poelstra and Nancy B. Ordway (hereinafter referred to both individually and collectively, as “Seller”), and Postal Realty LP, a Delaware limited partnership (“Purchaser”).

ARTICLE I.

SALE AND PURCHASE OF THE PROPERTY

1.01 Agreement to Sell and Convey. Each Seller, each holding a 33.333% membership interest, hereby agrees to sell and convey to Purchaser, and Purchaser hereby agrees to purchase from each Seller, subject to the terms and conditions hereinafter set forth, (a) all / 100% of the issued and outstanding equity interests (the “Contributed Interests”) in American Postal, LLC, a North Carolina limited liability company (the “Contributed Entity”), that directly owns certain real property being described on Exhibit “A” attached hereto and made part hereof for all purposes, and being described on Exhibit “A” attached hereto and made a part hereof for all purposes, and all rights and appurtenances pertaining thereto including, without limitation, (i) all right, title and interest of the Contributed Entity in and to adjacent streets, roads, alleys and rights-of-way, and any awards made or to be made in connection therewith, (ii) all rights of the Contributed Entity in and to all easements appurtenant to or benefiting such parcels of land, (iii) all development rights, air rights, water rights and mineral rights and interests pertaining to such land, (iv) all strips and gores of land lying adjacent to such land (collectively, the “Land”),(b) all buildings, fixtures and improvements located on the Land (collectively, the “Improvements”), (c) all furniture, fixtures, equipment, machines, apparatus, supplies and personal property of every nature and description and all replacements thereof now owned by the Contributed Entity (but not including any property of USPS (as hereinafter defined) and located in or on the Land and the Improvements, including, without limitation, all of the personal property made a part hereof for all purposes, and all of the right, title and interest of the Contributed Entity in and to any and all intangible personal property related to the Land and the Improvements, including, without limitation, all trade names and trademarks associated with the Land and the Improvements, (collectively, the “Personal Property”), but expressly excluding any personal property of USPS (hereinafter defined), and (d) the Land, the Improvements, the Personal Property, the Lease (as hereinafter defined), the Warranties (as hereinafter defined) and all such other rights, interests and properties are collectively called the “Property”.

1.02 Purchase Price. The purchase price (the “Purchase Price”) to be paid by Purchaser for all of the Contributed Interests / the Property shall be TWO MILLION FIVE HUNDRED SIXTY THOUSAND AND NO/100 DOLLARS ($2,560,000.00). It is the intent of the parties that such transaction be treated as a sale unless otherwise permitted by applicable law. The Purchase Price shall be paid by delivery of immediately available funds to the Title Company (as hereinafter defined) at the Closing (as hereinafter defined).

1.03 Earnest Money Deposit. For the purpose of securing the performance of Purchaser under this Agreement, within seven (7) business days after the Effective Date, Purchaser shall deliver to First American Title Company Attn: __________________ (the “Title Company”), an earnest money deposit in the amount of TEN THOUSAND and No/100 Dollars ($10,000.00) (the “Escrow Deposit”). The Escrow Deposit shall be held and disbursed by the Title Company in accordance with the terms of this Agreement. At the Closing, the Escrow Deposit shall be combined with the balance of the Purchase Price and delivered to Seller by the Title Company.

1.04 Inspection Period.

a. Purchaser shall have a period of [***] days after Purchaser’s receipt of the documents described in Section 1.04(b) below (such period being called the “Inspection Period”) within which to make all inspections and investigations desired by Purchaser with respect to the Property. If, within the Inspection Period, Purchaser determines that it does not desire to purchase the Contributed Entity, or in the case of a Contributed Entity that directly or indirectly owns multiple properties, one or more of such properties, Purchaser shall have the right to terminate this Agreement by written notice delivered to Seller and the Title Company prior to 5:00 p.m., New York City time, on the final day of the Inspection Period and upon any such termination, the full Escrow Deposit shall be immediately delivered to Purchaser and this Agreement shall be of no further force and effect. In the event that Purchaser does not desire to purchase, in the case of a Contributed Entity that directly or indirectly owns multiple properties, one or more of such properties, the Purchase Price shall be adjusted downward based upon the price allocation of the properties reflected on Exhibit A, attached hereto.

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b. Within three (3) days after the Effective Date, Seller shall, at its sole cost and expense, deliver or make available to Purchaser the following:

(i) Copies of the Contributed Entity’s owner title policy for the Property, existing survey of the Property, any and all engineering, structural, termite, property condition, soil or environmental reports relating to the Property and any plans and specifications or other architectural drawings for the Property which are in the possession or under the control of Seller;

(ii) Copies of all pleadings and other documents relating to any action, suit or proceeding involving the Contributed Entity or the Property and which is currently pending;

(iii) A copy of each agreement between Seller or the Contributed Entity and a third party pursuant to which such third party provides goods or services to or with respect to the Contributed Entity or the Property and all amendments thereto (collectively, the “Service Contracts”);

(iv) A list of all contractors and vendors (with phone numbers) that have been servicing the Property the past three (3) years, and copies of any accepted proposals for work completed in the past three (3) years with confirmation the work was completed and paid for;

(v) Copies of all bonds, guarantees and warranties relating to the Contributed Entity or the Property (collectively, the “Warranties”) currently existing or recently expired (within 5 years);

(vi) Copies of the real estate property tax and utility bills applicable to the Property for the past thirty-six (36) months;

(vii) Copies of all existing or recently expired extended coverage insurance policies, comprehensive general liability insurance policies, and any other insurance binders and paid invoices pertaining to the Property, including but not limited to a copy of the Insurance Loss Run Statement, or the ability for the Contributed Entity’s insurance company to provide to Purchaser;

(viii) Copies of the fully executed lease and all amendments thereto (the “Lease”) with the United States Postal Service (“USPS”, or sometimes referred to herein as the “Tenant”);

(ix) Copies of any correspondence to and from the USPS or their agents for the past 5 years;

(x) Copy of a 1099 from USPS for the current year;

(xi) Building plans or blueprints in Seller’s possession;

(xii) Copies of the Contributed Entity’s (including any direct or indirect subsidiary of the Contributed Entity that owns the Property) formation and organizational documents; and

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(xiii) Copies of the books and records maintained in connection with the ownership, management and operation of the Contributed Entity or the Property, Seller’s and the Contributed Entity’s signed tax return (or Schedule E), the income and expense statement, cash flow and other financial statements of Tenant, and the operating statements prepared by or on behalf of Seller with respect to the Contributed Entity and the Property for the past 36 months, including rent, real estate taxes, real estate tax reimbursements, insurance claims, utilities, repairs and maintenance. Purchaser and its agents and representatives shall be entitled to enter upon the Property for inspection, studies, testing and examination prior to the Closing. Without limitation of the foregoing, Seller shall make available to Purchaser either at the Property or at the offices of Seller (to be designated by Seller) all files of Seller and the Contributed Entity containing correspondence relating to the Lease, the Service Contracts, the Personal Property and any other matters relating to the Contributed Entity or the Property.

c. From and after the Effective Date, Purchaser shall have the right to deliver a written notice to Seller directing Seller to terminate, or cause the Contributed Entity to terminate, one (1) or more of the Service Contracts prior to the Closing (such notice being called the “Service Contract Termination Notice”). If Purchaser delivers the Service Contract Termination Notice to Seller, the Service Contracts described therein shall be terminated by Seller at or prior to the Closing and at Purchaser’s sole cost and expense.

d. In addition to the materials to be provided by Seller pursuant to Section 1.04(b) above, from and after the Effective Date, Seller shall immediately deliver to Purchaser any and all new documentation that may come into Seller’s possession or knowledge from and after the Effective Date related to the Contributed Entity or the Property, the Lease, the Service Contracts, and any other new leases or renewals of Lease or Service Contracts, including, without limitation, lease proposals, notice letters, letters of intent and any other writing related to the foregoing. During the pendency of this Agreement, Seller shall not execute, and shall cause the Contributed Entity not to execute, any contracts, leases or any other agreements relating the Property or the Tenant without Purchaser’s prior written consent, which consent shall not be unreasonably withheld, delayed or conditioned.

e. The Property shall be sold and conveyed on an “AS IS, WHERE IS” basis and in its present condition; however, only to the extent not handled by Tenant, Seller shall ensure that (1) all mechanical systems shall be in working order, including but not limited to, heating, air conditioning and electricity, (2) the Property shall be delivered free from leaks, and (3) the outside of the Property shall be maintained in its current condition.

ARTICLE II.

SURVEY AND TITLE COMMITMENT; PERMITTED EXCEPTIONS

2.01 Preliminary Title Report. Purchaser, at Purchaser’s sole cost and expense, shall cause the Title Company to issue and deliver to Purchaser a title commitment, update or abstract issued by the Title Company, accompanied by a legible copy of all recorded documents affecting the title to the Property and which would constitute encumbrances, restrictions, reservations or easements against the Property at the Closing (collectively, the “Title Commitment”). Within twenty (20) days after the Effective Date, Purchaser shall deliver written notice to Seller if the condition of title to the Property as set forth in Title Commitment [***] described in Section 2.02 below is not satisfactory to Purchaser (such notice being called the “Objection Notice”). Within seven (7) days of Seller’s receipt of the Objection Notice, Seller shall respond to Purchaser in writing (the “Seller’s Reply”) whether or not Seller will attempt to or can cure the unsatisfactory conditions to title. If Seller agrees to cure the unsatisfactory condition of title, such cure shall occur, if possible, prior to the Closing Date. However, if Seller is unwilling or unable to cure Purchaser’s objections as indicated in Seller’s Reply, then Purchaser, within seven (7) days of the receipt of Seller’s Reply, may elect to either (a) terminate this Agreement and receive a refund of the Escrow Deposit, or (b) proceed with the Closing without any reduction in the Purchase Price.

2.02 [***]

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2.03 Environmental Report. At the completion of the Inspection Period but prior to Closing, Purchaser shall order and receive a preliminary Environmental Report or a Phase I Environmental Report at Purchaser’s sole discretion. If such report presents an environmental issue, Purchaser may cancel this Agreement at any time, including after the Inspection Period.

ARTICLE III.

CLOSING

3.01 Closing Date. The consummation of the transactions contemplated by this Agreement (the “Closing”) shall take place in the offices of the Title Company, via mail within thirty (30) days after the expiration of the Inspection Period (such date being called the “Closing Date”), time being of the essence.

3.02 Seller’s Obligations at Closing. At the Closing, Seller shall do the following:

a. Execute, acknowledge, and deliver to Purchaser an assignment and assumption of membership interest in a form mutually acceptable to Seller and Purchaser, and that Purchaser will execute and deliver to Seller.

b. [Intentionally deleted]

c. [Intentionally deleted]

d. Execute and deliver an affidavit that there will be no unpaid bills or claims for labor performed or materials furnished, or contracted to be performed or furnished, upon the Property.

e. Deliver such organizational and authority documents of the Contributed Entity as the Title Company may reasonably require in connection with the Closing.

f. Execute and deliver such other documents as the Title Company may reasonably require in connection with the Closing including, without limitation, a closing statement, all transfer tax and conveyance documents and forms, and one (1) or more accurate affidavits regarding debts, liens and possession of the Property.

g. [Intentionally deleted]

h. Deliver to Purchaser all keys or other access devices in the actual possession of Seller or the Contributed Entity to all locks located in the Property.

i. Deliver to Purchaser originals, or, if any originals are not in Seller’s actual possession, copies, certified as being true, correct and complete in all material respects, of the Lease, the Service Contracts, the Warranties, and all plans, governmental approvals, licenses, permits, and other contracts and agreements relating to the ownership and operation of the Contributed Entity and the Property.

j. Deliver to Purchaser copies of the complete building file and all books and records pertaining to the operation of the Contributed Entity and the Property in the actual possession of Seller or the Contributed Entity.

3.03 Purchaser’s Obligations at Closing. Contemporaneously with the performance by Seller of its obligations set forth in Section 3.02 above, Purchaser shall do the following at the Closing:

a. Pay to Seller (or cause the Title Company to pay to Seller) the Purchase Price as provided in Section 1.02 above.

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b. Deliver such organizational and authority documents of Purchaser as the Title Company may reasonably require in connection with the Closing.

c. Execute and deliver such other documents as the Title Company may reasonably require in connection with the Closing including, without limitation, a closing statement.

3.04 [***]

3.05 Conditions to Purchaser’s Obligations. Purchaser’s obligation to purchase the Contributed Entity under this Agreement is subject to the satisfaction of each of the following conditions, any of which may be waived in whole or in part only in writing by Purchaser at or prior to the Closing Date:

a. Seller shall have delivered to the Title Company the items described in Section 3.02 above and shall otherwise have performed its obligations under Section 3.02 above.

b. There shall be no breach of any of Seller’s representations and warranties or covenants set forth in Article IV below as of the Closing Date.

c. Purchaser shall not have terminated this Agreement pursuant to any provision herein.

d. [Intentionally deleted]

e. Seller affirms that (i) the Lease is in full force and effect, (ii) there is no default by Tenant under the Lease nor has there been notice or demand for its cancellation, (iii) that USPS is occupying the Property and is paying rental due under the Lease, and (iv) there is no outstanding maintenance on the Property.

In the event any of such conditions are not satisfied or waived by Purchaser in writing, Purchaser shall have the right to terminate this Agreement by written notice to Seller and upon any such termination, the full Escrow Deposit shall be refunded to Purchaser.

3.06 Prorations. The following items shall be prorated between Seller and Purchaser (with Purchaser deemed to be holding title as of the Closing Date):

a. All ad valorem and other real estate taxes with respect to the Property (collectively, the “Taxes”) shall be prorated as of 12:01 a.m. on the Closing Date. If the Closing shall occur before the tax rate is fixed for the then current year, the apportionment of the Taxes shall be made upon the basis of the tax rate for the immediately preceding tax year applied to the latest assessed valuation of the Property. Within thirty (30) days after the actual amount of the Taxes for the year in which the Closing occurs are determined, Seller and Purchaser shall adjust the proration of the Taxes and Seller or Purchaser, as the case may be, shall pay to the other any amount required as a result of such adjustment. All unpaid taxes and taxes assessed against the Property for prior years due to a change in use or ownership of the Property shall be paid by Seller. Notwithstanding the foregoing, there will be no proration of taxes among the parties pursuant to this provisions for which the payor is entitled to or has received a reimbursement from USPS.

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b. All rent and other amounts payable under the Lease shall be prorated as of 12:01 a.m. on the Closing Date. Seller shall be charged with, and Purchaser shall receive, a credit against the Purchase Price for (i) any rent and other amounts collected by Seller or the Contributed Entity with respect to the Property prior to the Closing Date, but applicable to any period after the Closing Date and (ii) any security deposits held by Seller or the Contributed Entity with respect to the Property and prepaid rents received by Seller or the Contributed Entity with respect to the Property under the Lease. Rent is deemed to be delinquent when payment thereof is due on or prior to Closing but has not been made by Closing. Delinquent rent shall be prorated between Purchaser and Seller as of the Closing as if Seller or the Contributed Entity had received such rent and consequently, Seller shall not be entitled to any credit or increase to the Purchase Price as a result of such delinquent rent. Seller is permitted to pursue Tenant for delinquent rent that was due prior to Closing, but agrees to do so in a commercially reasonable manner (provided, however, that: (a) Seller shall not seek to have Tenant’s possession of the Land and the Improvements under the Lease terminated; and (b) Seller shall not be entitled to any rent received from Tenant after the Closing unless Tenant is current in its rent obligations to Purchaser for periods occurring from and after Closing). Delinquent rent collected by Purchaser (if any), net of the costs of collection (including attorneys’ fees), shall be applied first against those amounts currently due (or to be due within ten (10) days) and then to amounts most recently overdue. Any payments due to Seller as a result of collected delinquent rent shall be payable by Purchaser to Seller upon receipt thereof. In the event Seller receives the rental check from Tenant after the Closing, and it was not a part of the rent proration, Seller shall immediately remit to Purchaser the full amount of the check received. Both parties acknowledge that USPS rents are paid in arrears, at the end of month, and shall be adjusted accordingly.

c. All other income and operating expenses of the Contributed Entity or the Property, including, without limitation, public utility charges, maintenance, management, and other service charges, and all other normal operating charges shall be prorated as of the Closing Date based upon the best available information (it being understood that, unless otherwise indicated, Seller, on behalf of the Contributed Entity, shall pay all amounts due with respect to the Property that accrue prior to the Closing Date), or, in Purchaser’s sole discretion, moved into Purchaser’s name as of the Closing Date.

d. With respect to leasing commissions, tenant finish costs, costs associated with architectural plans and specifications, utility splits, and demising costs, if any, Seller shall be responsible for the payment of all such costs at the Closing.

e. For purposes of proration only, Purchaser is deemed to own on the Property on the Closing Date.

f. This Section 3.06 shall not merge with the Deed and shall survive the Closing.

ARTICLE IV.

REPRESENTATIONS AND WARRANTIES AND COVENANTS

4.01 Representations and Warranties of Seller. Each Seller, severally and not jointly, hereby represents and warrants to Purchaser, both as of the Effective Date and as of the Closing Date, as follows:

a. The Contributed Entity is a limited liability company duly formed, validly existing and in good standing under the laws of the State of North Carolina.

b. Seller and the Contributed Entity, as applicable, has good, indefeasible and marketable fee simple title to the Contributed Interests and the Land and the Improvements and good title to the Personal Property, free and clear of any liens or security interests.

c. Seller has all requisite power and authority, and has taken all actions required by its organizational documents and to authorize it to execute and deliver this Agreement and the closing documents. The individual(s) executing this Agreement and any other documents and instruments executed by Seller pursuant hereto has the legal power, right, and actual authority to bind Seller to the terms and conditions hereof and thereof.

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d. The rent roll for the Property, delivered to Purchaser, is true, correct and complete in all material respects. The list of Service Contracts and Warranties, delivered to Purchaser, is true, correct and complete in all material respects.

e. To Seller’s actual knowledge, the Contributed Entity is not in default of any of its obligations under the Lease and no event has occurred which with notice, the passing of time or both, would constitute a default or an event of default under the Lease.

f. To Seller’s actual knowledge, there are no leasing commissions, tenant finish costs, costs associated with architectural plans and specifications, utility splits, or demising costs payable by the landlord under the Lease from and after the Closing Date.

g. To Seller’s actual knowledge, the Contributed Entity is not in default of any of its obligations under the Service Contracts and no event has occurred which with notice, the passing of time or both, would constitute a default or an event of default under any of the Service Contracts.

h. There is no action, claim, lawsuit, litigation or proceeding pending against or with respect to the Contributed Entity and the Property or against Seller (which would materially adversely affect the Contributed Entity or the Property, or which would materially impair or otherwise materially affect Seller’s or the Contributed Entity’s ability to perform its obligations hereunder), and to the actual knowledge of Seller, no such action, claim, lawsuit, litigation or proceeding has been made or threatened.

i. Seller has not received notice of any pending or contemplated taking or condemnation of all or any portion of the Property.

j. To the actual knowledge of Seller, (i) neither the Contributed Entity nor the Property is in violation of any law, code, ordinance, permit, license or restriction applicable to the Contributed Entity or the Property, and (ii) hazardous wastes or hazardous substances are not currently present and have not been stored, handled, installed, released, discharged or disposed of in, on, under or about the Property.

k. Seller is not a “foreign person” as that term is defined in Section 1445 of the Internal Revenue Code of 1986, as amended, and any applicable regulations promulgated thereunder.

1. There do not exist any rights of first refusal or first offer or options to purchase the Property or the Contributed Interests.

m. Neither Seller nor the Contributed Entity has made a general assignment for the benefit of creditors, filed any voluntary petition in bankruptcy or suffered the filing of an involuntary petition by its creditors, suffered the appointment of a receiver to take possession of substantially all of its assets, suffered the attachment or other judicial seizure of substantially all of its assets, admitted its inability to pay its debts as they come due, or made an offer of settlement, extension or composition to its creditors generally.

n. All bills for work done by Seller or materials furnished to the Contributed Entity with respect to the Property by Seller have been paid in full or will be paid in full and discharged by the Closing Date.

o. Seller is not acting, directly or indirectly for, or on behalf of, any person, group, entity or nation named by any Executive Order (including the September 24, 2001, Executive Order Blocking Property and Prohibiting Transactions With Persons Who Commit, Threaten to Commit, or Support Terrorism) or the United States Treasury Department as a terrorist, “Specially Designated National and Blocked Person,” or other banned or blocked person, entity, or nation pursuant to any law that is enforced or administered by the Office of Foreign Assets Control, and is not engaging in this transaction, directly or indirectly, on behalf of, or instigating or facilitating this transaction, directly or indirectly, on behalf of, any such person, group, entity or nation.

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p. Seller shall be responsible for maintenance enforced by the USPS prior to the Closing, even if the United States Postal Services enforces such maintenance obligations of Seller subsequent to the Closing;

4.02 Representations and Warranties of Purchaser. Purchaser represents and warrants to Seller that Purchaser has all requisite power and authority, has taken all actions required by its organizational documents and applicable law, and has obtained all consents which are necessary to authorize or enable it to execute and deliver this Agreement.

4.03 Survival. The representations and warranties in this Article IV shall survive the Closing for a period of twenty-four (24) months in relation to Section 4.01(p) and twelve (12) months, but no further, in relation to the remainder of this Article IV.

4.04 Covenants and Agreements of Seller. Seller covenants and agrees with Purchaser that from the Effective Date until the Closing Date:

a. From and after the Effective Date until the Closing Date, Seller shall continue the operation of the Contributed Entity and the Property as presently operated and in accordance with prudent business practices, and maintain the Property in its present condition, ordinary wear and tear excepted. Should any equipment, fixtures or services fail between the Effective Date and the Closing Date for which Seller is responsible, Seller shall be responsible for the repair or replacement of such equipment, fixtures or services with a unit of similar size and quality, or at Purchaser’s option, Seller shall give Purchaser a settlement statement credit for the cost of such repair or replacement. From and after the Effective Date until the Closing Date, Seller shall not knowingly violate or allow the violation of any applicable laws with respect to the Property and the Contributed Entity. From and after the Effective Date until the Closing Date, Seller shall do or cause to be done all things reasonably within its control to comply with any and all easements, grants, appurtenances, privileges and licenses encumbering the Property. Further, Seller agrees to pay, as and when due, whether on its own behalf or on behalf of the Contributed Entity, all costs and expenses which have accrued prior to the Closing Date on any encumbrances presently affecting the Property.

b. Seller shall notify Purchaser of any litigation, arbitration, administrative hearing or condemnation proceeding before any court or governmental agency concerning or affecting the Contributed Entity or the Property which is instituted or threatened after the Effective Date.

c. Seller shall not enter into any new lease agreement covering all or any portion of the Property or amend or terminate the Lease without the prior written consent of Purchaser.

d. Seller shall promptly deliver to Purchaser copies of any written notice received from Tenant of its election to vacate any leased premises or terminate the Lease or claiming a default under the Lease.

e. Seller shall not remove any of the Personal Property from the Property, unless Seller shall replace the removed items with similar items of comparable quality and utility.

f. Seller will not enter into any agreement or contract with respect to the Contributed Entity or the Property or amend any of the Service Contracts without the prior written consent of Purchaser.

g. Seller shall maintain the current or materially similar insurance coverage on the Contributed Entity and the Property.

h. Seller shall perform all of its obligations under the Lease and the Service Contracts.

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ARTICLE V.

CASUALTY AND CONDEMNATION

5.01 [***]

5.02 [***]

ARTICLE VI.

PROVISIONS WITH RESPECT TO DEFAULT

6.01 Default by Seller. In the event Seller fails to perform any of its obligations under this Agreement at any time when Purchaser is not in default hereunder, Purchaser may, at its election and as its sole and exclusive remedy (except as provided in the following sentence), either (a) terminate this Agreement, receive full payment of the Escrow Deposit from the Title Company and recover from Seller its verifiable out-of-pocket expenses incurred in connection with Purchaser’s performance, hereunder, or (b) enforce specific performance of this Agreement against Seller.

6.02 Default by Purchaser. In the event Purchaser fails to purchase the Property for any reason, except for a default by Seller as provided in Section 6.01 above or the termination by Purchaser of this Agreement pursuant to a right of termination expressly granted to Purchaser hereunder, Seller may, at its election and as its sole and exclusive remedy, terminate this Agreement and receive the full Escrow Deposit from the Title Company as liquidated damages. The parties have agreed that Seller’s actual damages, in the event of Purchaser’s failure to close in breach hereof, would be extremely difficult or impracticable to determine. Therefore, the parties expressly acknowledge that the Escrow Deposit has been agreed upon, after negotiation, as the parties’ reasonable estimate of Seller’s damages.

ARTICLE VII.

MISCELLANEOUS

7.01 Brokerage Fees and Commissions. Seller and Purchaser each represent and warrant to the other that they have not dealt with any real estate agent or broker in connection with the transaction evidenced by this Agreement. If any claims for brokerage commissions or fees are ever made against Seller or Purchaser in connection with this transaction, all such claims shall be handled and paid by the party whose commitments form the basis of such claims. Seller and Purchaser each agree to indemnify and hold harmless the other from and against any and all such claims or demands with respect to any brokerage fees or agents’ commissions or other compensation asserted by any person, firm, or corporation in connection with this Agreement or the transactions contemplated herein insofar as any such claim or demand is based upon a contract or commitment of the indemnifying party.

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7.02 Audit. In the event that Purchaser requires additional reasonable information from Seller, for accounting or tax purposes, Seller shall reasonably accommodate Purchaser’s request.

7.03 Notices. Any notice to be given or to be served upon any party hereto, in connection with this Agreement, must be in writing, and may be given by personal delivery, overnight mail, facsimile transmission or email. Notices given by personal delivery shall be deemed given on when received; overnight mail shall be deemed given on the next business day after mailing; and facsimile transmission or email shall be deemed given and received as of the time and date set forth on the electronic confirmed receipt of transmission of the sender. Such notices shall be given to the parties hereto at the following addresses:

Seller:	Hugh B. Barwick, Jr. 1911 Sunset Avenue Clinton, NC 28328 Email: hbbarwick@embarqmail.com
with a copy to:	Manning, Fulton & Skinner, P.A. 3605 Glenwood Avenue, Suite 500 Raleigh, NC 27612 Attn: Barry D. Mann Fax: (919) 325-4616 Email: mann@manningfulton.com
Purchaser:	Postal Realty LP 75 Columbia Avenue Cedarhurst, NY 11516 Attn: Carrie Herz, Esq. Fax: (646) 506-3197 Email: cherz@postalrealty.com
with a copy to:	_______________________________________________
	_______________________________________________
	_______________________________________________
	Attn: ___________________________________________
	Email: __________________________________________

Any party hereto may, at any time by giving five (5) days’ written notice to the other party hereto, designate any other address in substitution of the foregoing address to which such notice shall be given.

7.04 Entire Agreement; Modification. This Agreement embodies and constitutes the entire understanding among the parties with respect to the transactions contemplated herein, and all prior or contemporaneous agreements, understandings, representations and statements, oral or written, are merged into this Agreement. Neither this Agreement nor any provision hereof may be waived, modified, amended, discharged or terminated except by an instrument in writing signed by the party against which the enforcement of such waiver, modification, amendment, discharge or termination is sought, and then only to the extent set forth in such instrument.

7.05 Headings. Descriptive headings are for convenience only and shall not control or affect the meaning or construction of any provision of this Agreement.

7.06 Binding Effect. This Agreement shall be binding upon and shall inure to the benefit of the parties hereto and their successors and assigns, provided that except as provided in Section 7.09 below, no assignment shall be made by either party without the prior written consent of the other party.

7.07 Days. If the final date of any period which is set out in any provision of this Agreement or the Closing Date falls on a Saturday, Sunday or legal holiday under the laws of the United States or the State of New York, then the time of such period or the Closing Date, as the case may be, shall be extended to the next calendar day which is not a Saturday, Sunday or legal holiday.

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7.08 Multiple Counterparts; Facsimile Signatures. This Agreement may be executed in a number of identical counterparts, each of which for all purposes is deemed an original, and all of which constitute collectively one agreement, but in making proof of this Agreement, it shall not be necessary to produce or account for more than one such counterpart. Signatures to this Agreement may be transmitted via facsimile and/or scanned and e-mailed and delivery thereby shall be deemed sufficient for all purposes to the same extent as would be delivery of an original signature.

7.09 Assignment by Purchaser. Notwithstanding Section 7.06 above, Purchaser shall have the right to assign (without recourse) its rights under this Agreement to an affiliated entity designated by Purchaser to acquire the Property.

7.10 Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of New York, without giving effect to the principles of conflicts of laws.

7.11 Attorneys’ Fees. Should either party hereto institute any action or proceeding in court to enforce this Agreement, the prevailing party in any such action or proceeding shall be entitled to receive from the non-prevailing party all reasonable attorneys’ fees and court costs in connection with such action or proceeding

7.12 Reporting Person. The Title Company is hereby designated as the “Reporting Person” pursuant to Section 6045 of the Internal Revenue Code and the Regulations promulgated thereunder.

7.13 Construction. The parties acknowledge and agree that the parties and their counsel have reviewed this Agreement and this Agreement shall not be presumptively interpreted against either party.

7.14 Severability. In the event any provision of this Agreement is held to be invalid, illegal, or unenforceable by a court of competent jurisdiction, the invalid, illegal or unenforceable provision shall not affect any other provisions, and this Agreement shall be construed as if the invalid, illegal, or unenforceable provision is severed and deleted from this Agreement.

7.15 Gender; Number. Unless the context requires otherwise, all pronouns used in this Agreement shall be construed to include the other genders, whether used in the masculine, feminine or neuter gender. Words in the singular number shall be construed to include the plural, and words in the plural shall be construed to include the singular.

7.16 1031 Exchange. It is understood that either Purchaser or Seller may choose to enact a 1031 Tax Exchange and agreed that both parties will cooperate at no cost or delay to either party.

7.17 Confidentiality: It is understood that the information in this contract must remain confidential. Seller shall not disclose information herein, unless necessary to facilitate the terms of the Contract.

7.18 Preparation of Financial Statements. At Purchaser’s request, at any time prior to or after the Closing, Seller shall provide Purchaser’s designated independent auditor access to the books and records of each Property that are necessary for compliance with Purchaser’s obligations under the federal securities laws, mandating preparation of financial statements in accordance with Rule 3-14 of Regulation S-X, as it may be amended or modified by the United States Securities and Exchange Commission from time to time, and Seller shall provide to such auditor a representation letter regarding the books and records of the Property, in a form each satisfactory to such auditor.

7.19 Duration of Offer: If this offer is not accepted by Seller on or before 5:00 pm EDT on July 19, 2019 and delivered to the undersigned, it shall be deemed automatically revoked.

(Signatures on following page)

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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and your first above written; provided, however, that for the purpose of determining “the date hereof,” as used in this Agreement, such date shall be the last date any of the parties hereto executes this Agreement.

SELLER:
By:	/s/ Hugh B. Barwick, Jr.
Name: Hugh B. Barwick, Jr.
Title:	Title: MEMBER, AMERICAN POSTAL, LLC
By:	/s/ Gary L. Poelstra
Name: Gary L. Poelstra
Title: MEMBER, AMERICAN POSTAL, LLC
By:	/s/ Nancy B. Ordway
name:	Nancy B. Ordway
Title: MEMBER, AMERICAN POSTAL, LLC
Date of Execution: July 16, 2019
PURCHASER:
/s/ Andrew Spodek
a(n) Postal Realty LP Delaware limited partnership
By: Postal Realty Trust, Inc., sole general partner
Name: Andrew Spodek
Title: Authorized Signatory
Date of Execution: July 16, 2019

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EX-10.2

Exhibit 10.2

EXECUTION VERSION

*Certain identified information has been excluded from this exhibit because it is
both (i) not material and (ii) would be competitively harmful if publicly disclosed.
The redacted confidential portions of the exhibit are marked by [***].

AGREEMENT OF PURCHASE AND SALE

BY AND AMONG

POSTAL REALTY LP

and

HUGH B. BARWICK, JR., BENJAMIN C. BARWICK and GARY L. POELSTRA

Dated: July 16, 2019

AGREEMENT OF PURCHASE AND SALE

This AGREEMENT OF PURCHASE AND SALE (this “Agreement”), is made and entered into this 16^th day of July, 2019 (the “Effective Date”), by and among Hugh B. Barwick, Jr., Benjamin C. Barwick, and Gary L. Poelstra (hereinafter referred to both individually and collectively as “Seller”), and Postal Realty LP, a Delaware limited partnership (“Purchaser”).

ARTICLE I.

SALE AND PURCHASE OF THE PROPERTY

1.01 Agreement to Sell and Convey. Each Seller hereby agrees to sell and convey to Purchaser, and Purchaser hereby agrees to purchase from each Seller, subject to the terms and conditions hereinafter set forth, (a) all / 100% of the issued and outstanding equity interests (the “Contributed Interests”) in Barwick Poelstra, LLC, a North Carolina limited liability company (the “Contributed Entity”), that directly owns certain real property being described on Exhibit “A” attached hereto and made part hereof for all purposes, and being described on Exhibit “A” attached hereto and made a part hereof for all purposes, and all rights and appurtenances pertaining thereto including, without limitation, (i) all right, title and interest of the Contributed Entity in and to adjacent streets, roads, alleys and rights-of-way, and any awards made or to be made in connection therewith, (ii) all rights of the Contributed Entity in and to all easements appurtenant to or benefiting such parcels of land, (iii) all development rights, air rights, water rights and mineral rights and interests pertaining to such land, (iv) all strips and gores of land lying adjacent to such land (collectively, the “Land”), (b) all buildings, fixtures and improvements located on the Land (collectively, the “Improvements”), (c) all furniture, fixtures, equipment, machines, apparatus, supplies and personal property of every nature and description and all replacements thereof now owned by the Contributed Entity (but not including any property of USPS (as hereinafter defined) and located in or on the Land and the Improvements, including, without limitation, all of the personal property made a part hereof for all purposes, and all of the right, title and interest of the Contributed Entity in and to any and all intangible personal property related to the Land and the Improvements, including, without limitation, all trade names and trademarks associated with the Land and the Improvements, (collectively, the “Personal Property”), but expressly excluding any personal property of USPS (hereinafter defined), and (d) the Land, the Improvements, the Personal Property, the Lease (as hereinafter defined), the Warranties (as hereinafter defined) and all such other rights, interests and properties are collectively called the “Property”.

1.02 Purchase Price. The purchase price (the “Purchase Price”) to be paid by Purchaser for all of the Contributed Interests shall be the sum of (i) FOUR MILLION ONE HUNDRED TWENTY ONE THOUSAND SEVEN HUNDRED AND FIFTY AND 00/100 DOLLARS ($4,121,750.00) in cash plus (ii) EIGHT HUNDRED TWENTY FOUR THOUSAND AND THREE HUNDRED AND FIFTY (824,350) valued Class A common units of limited partnership interest, at SEVENTEEN AND 00/100 DOLLARS ($17.00) a unit (“OP Units”), of Postal Realty LP, a Delaware limited partnership (the “Operating Partnership”). The Purchase Price, including the OP Units, shall be allocated among Seller in accordance with the percentages set forth on Exhibit “B” attached hereto and incorporated by reference. It is the intent of the parties that the cash portion of such transaction be treated as a sale unless otherwise permitted by applicable law, and that the portion of the transaction whereby Contributed Interests are exchanges for OP Units be treated as a contribution for federal and state income tax purposes as more specifically described in Section 1.02 of the OP Unit Addendum (the “Addendum”) attached hereto as Exhibit “C”. The Addendum is made a part a part of this Agreement in all respects.

1.03 Earnest Money Deposit. For the purpose of securing the performance of Purchaser under this Agreement, within seven (7) business days after the Effective Date, Purchaser shall deliver to First American Title Company Attn: _____________ (the “Title Company”), an earnest money deposit in the amount of TEN THOUSAND and No/100 Dollars ($10,000.00) (the “Escrow Deposit”). The Escrow Deposit shall be held and disbursed by the Title Company in accordance with the terms of this Agreement. At the Closing, the Escrow Deposit shall be combined with the balance of the Purchase Price and delivered to Seller by the Title Company.

1.04 Inspection Period.

a. Purchaser shall have a period of [***] days after Purchaser’s receipt of the documents described in Section 1.04(b) below (such period being called the “Inspection Period”) within which to make all inspections and investigations desired by Purchaser with respect to the Property. If, within the Inspection Period, Purchaser determines that it does not desire to purchase the Contributed Entity, or in the case of a Contributed Entity that directly or indirectly owns multiple properties, one or more of such properties, Purchaser shall have the right to terminate this Agreement by written notice delivered to Seller and the Title Company prior to 5:00 p.m., New York City time, on the final day of the Inspection Period and upon any such termination, the full Escrow Deposit shall be immediately delivered to Purchaser and this Agreement shall be of no further force and effect. In the event that Purchaser does not desire to purchase, in the case of a Contributed Entity that directly or indirectly owns multiple properties, one or more of such properties, the Purchase Price shall be adjusted downward based upon the price allocation of the properties reflected on Exhibit A, attached hereto.

b. Within three (3) days after the Effective Date, Seller shall, at its sole cost and expense, deliver or make available to Purchaser the following:

(i) Copies of the Contributed Entity’s owner title policy for the Property, existing survey of the Property, any and all engineering, structural, termite, property condition, soil or environmental reports relating to the Property and any plans and specifications or other architectural drawings for the Property which are in the possession or under the control of Seller;

(ii) Copies of all pleadings and other documents relating to any action, suit or proceeding involving the Contributed Entity or the Property and which is currently pending;

(iii) A copy of each agreement between Seller or the Contributed Entity and a third party pursuant to which such third party provides goods or services to or with respect to the Contributed Entity or the Property and all amendments thereto (collectively, the “Service Contracts”);

(iv) A list of all contractors and vendors (with phone numbers) that have been servicing the Property the past three (3) years, and copies of any accepted proposals for work completed in the past three (3) years with confirmation the work was completed and paid for;

(v) Copies of all bonds, guarantees and warranties relating to the Contributed Entity or the Property (collectively, the “Warranties”)currently existing or recently expired (within 5 years);

(vi) Copies of the real estate property tax and utility bills applicable to the Property for the past thirty-six (36) months;

(vii) Copies of all existing or recently expired extended coverage insurance policies, comprehensive general liability insurance policies, and any other insurance binders and paid invoices pertaining to the Property, including but not limited to a copy of the Insurance Loss Run Statement, or the ability for the Contributed Entity’s insurance company to provide to Purchaser;

(viii) Copies of the fully executed lease and all amendments thereto (the “Lease”) with the United States Postal Service (“USPS”, or sometimes referred to herein as the “Tenant”);

(ix) Copies of any correspondence to and from the USPS or their agents for the past 5 years;

(x) Copy of a 1099 from USPS for the current year;

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(xi) Building plans or blueprints in Seller’s possession;

(xii) Copies of the Contributed Entity’s (including any direct or indirect subsidiary of the Contributed Entity that owns the Property) formation and organizational documents; and

(xiii) Copies of the books and records maintained in connection with the ownership, management and operation of the Contributed Entity or the Property, Seller’s and the Contributed Entity’s signed tax return (or Schedule E), the income and expense statement, cash flow and other financial statements of Tenant, and the operating statements prepared by or on behalf of Seller with respect to the Contributed Entity and the Property for the past 36 months, including rent, real estate taxes, real estate tax reimbursements, insurance claims, utilities, repairs and maintenance. Purchaser and its agents and representatives shall be entitled to enter upon the Property for inspection, studies, testing and examination prior to the Closing. Without limitation of the foregoing, Seller shall make available to Purchaser either at the Property or at the offices of Seller (to be designated by Seller) all files of Seller and the Contributed Entity containing correspondence relating to the Lease, the Service Contracts, the Personal Property and .any other matters relating to the Contributed Entity or the Property.

c. From and after the Effective Date, Purchaser shall have the right to deliver a written notice to Seller directing Seller to terminate, or cause the Contributed Entity to terminate, one (1) or more of the Service Contracts prior to the Closing (such notice being called the “Service Contract Termination Notice”). If Purchaser delivers the Service Contract Termination Notice to Seller, the Service Contracts described therein shall be terminated by Seller at or prior to the Closing and at Purchaser’s sole cost and expense.

d. In addition to the materials to be provided by Seller pursuant to Section 1.04(b) above, from and after the Effective Date, Seller shall immediately deliver to Purchaser any and all new documentation that may come into Seller’s possession or knowledge from and after the Effective Date related to the Contributed Entity or the Property, the Lease, the Service Contracts, and any other new leases or renewals of Lease or Service Contracts, including, without limitation, lease proposals, notice letters, letters of intent and any other writing related to the foregoing. During the pendency of this Agreement, Seller shall not execute, and shall cause the Contributed Entity not to execute, any contracts, leases or any other agreements relating the Property or the Tenant without Purchaser’s prior written consent, which consent shall not be unreasonably withheld, delayed or conditioned.

e. The Property shall be sold and conveyed on an “AS IS, WHERE IS” basis and in its present condition; however, only to the extent not handled by Tenant, Seller shall ensure that (1) all mechanical systems shall be in working order, including but not limited to, heating, air conditioning and electricity, (2) the Property shall be delivered free from leaks, and (3) the outside of the Property shall be maintained in its current condition.

ARTICLE II.

SURVEY AND TITLE COMMITMENT; PERMITTED EXCEPTIONS

2.01 Preliminary Title Report. Purchaser, at Purchaser’s sole cost and expense, shall cause the Title Company to issue and deliver to Purchaser a title commitment, update or abstract issued by the Title Company, accompanied by a legible copy of all recorded documents affecting the title to the Property and which would constitute encumbrances, restrictions, reservations or easements against the Property at the Closing (collectively, the “Title Commitment”). Within twenty (20) days after the Effective Date, Purchaser shall deliver written notice to Seller if the condition of title to the Property as set forth in Title Commitment [***] described in Section 2.02 below is not satisfactory to Purchaser (such notice being called the “Objection Notice”). Within seven (7) days of Seller’s receipt of the Objection Notice, Seller shall respond to Purchaser in writing (the “Seller’s Reply”) whether or not Seller will attempt to or can cure the unsatisfactory conditions to title. If Seller agrees to cure the unsatisfactory condition of title, such cure shall occur, if possible, prior to the Closing Date. However, if Seller is unwilling or unable to cure Purchaser’s objections as indicated in Seller’s Reply, then Purchaser, within seven (7) days of the receipt of Seller’s Reply, may elect to either (a) terminate this Agreement and receive a refund of the Escrow Deposit, or (b) proceed with the Closing without any reduction in the Purchase Price.

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2.02 [***]

2.03 Environmental Report. At the completion of the Inspection Period but prior to Closing, Purchaser shall order and receive a preliminary Environmental Report or a Phase I Environmental Report at Purchaser’s sole discretion. If such report presents an environmental issue, Purchaser may cancel this Agreement at any time, including after the Inspection Period.

ARTICLE III.

CLOSING

3.01 Closing Date. The consummation of the transactions contemplated by this Agreement (the “Closing”) shall take place in the offices of the Title Company via mail within thirty (30) days after the expiration of the Inspection Period (such date being called the “Closing Date”), time being of the essence.

3.02 Seller’s Obligations at Closing. At the Closing, Seller shall do the following:

a. Execute, acknowledge, and deliver to Purchaser an assignment and assumption of membership interest in a form mutually acceptable to Seller and Purchaser, and that Purchaser will execute and deliver to Seller.

b. [Intentionally deleted]

c. [Intentionally deleted]

d. Execute and deliver an affidavit that there will be no unpaid bills or claims for labor performed or materials furnished, or contracted to be performed or furnished, upon the Property.

e. Deliver such organizational and authority documents of the Contributed Entity as the Title Company may reasonably require in connection with the Closing.

f. Execute and deliver such other documents as the Title Company may reasonably require in connection with the Closing including, without limitation, a closing statement, all transfer tax and conveyance documents and forms, and one (1) or more accurate affidavits regarding debts, liens and possession of the Property.

g. [Intentionally deleted]

h. Deliver to Purchaser all keys or other access devices in the actual possession of Seller or the Contributed Entity to all locks located in the Property.

i. Deliver to Purchaser originals, or, if any originals are not in Seller’s actual possession, copies, certified as being true, correct and complete in all material respects, of the Lease, the Service Contracts, the Warranties, and all plans, governmental approvals, licenses, permits, and other contracts and agreements relating to the ownership and operation of the Contributed Entity and the Property.

j. Deliver to Purchaser copies of the complete building file and all books and records pertaining to the operation of the Contributed Entity and the Property in the actual possession of Seller or the Contributed Entity.

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3.03 Purchaser’s Obligations at Closing. Contemporaneously with the performance by Seller of its obligations set forth in Section 3.02 above, Purchaser shall do the following at the Closing:

a. Pay to Seller (or cause the Title Company to pay to Seller) the Purchase Price as provided in Section 1.02 above subject to any withholding required by law.

b. Deliver such organizational and authority documents of Purchaser as the Title Company may reasonably require in connection with the Closing.

c. Execute and deliver such other documents as the Title Company may reasonably require in connection with the Closing including, without limitation, a closing statement.

3.04 [***]

3.05 Conditions to Purchaser’s Obligations. Purchaser’s obligation to purchase the Contributed Entity under this Agreement is subject to the satisfaction of each of the following conditions, any of which may be waived in whole or in part only in writing by Purchaser at or prior to the Closing Date:

a. Seller shall have delivered to the Title Company the items described in Section 3.02 above and shall otherwise have performed its obligations under Section 3.02 above.

b. There shall be no breach of any of Seller’s representations and warranties or covenants set forth in Article IV below as of the Closing Date.

c. Purchaser shall not have terminated this Agreement pursuant to any provision herein.

d. [Intentionally deleted]

e. Seller affirms that (i) the Lease is in full force and effect, (ii) there is no default by Tenant under the Lease nor has there been notice or demand for its cancellation, (iii) that USPS is occupying the Property and is paying rental due under the Lease, and (iv) there is no outstanding maintenance on the Property.

In the event any of such conditions are not satisfied or waived by Purchaser in writing, Purchaser shall have the right to terminate this Agreement by written notice to Seller and upon any such termination, the full Escrow Deposit shall be refunded to Purchaser.

3.06 Prorations. The following items shall be prorated between Seller and Purchaser (with Purchaser deemed to be holding title as of the Closing Date):

a. All ad valorem and other real estate taxes with respect to the Property (collectively, the “Taxes”) shall be prorated as of 12:01 a.m. on the Closing Date. If the Closing shall occur before the tax rate is fixed for the then current year, the apportionment of the Taxes shall be made upon the basis of the tax rate for the immediately preceding tax year applied to the latest assessed valuation of the Property. Within thirty (30) days after the actual amount of the Taxes for the year in which the Closing occurs are determined, Seller and Purchaser shall adjust the proration of the Taxes and Seller or Purchaser, as the case may be, shall pay to the other any amount required as a result of such adjustment. All unpaid taxes and taxes assessed against the Property for prior years due to a change in use or ownership of the Property shall be paid by Seller. Notwithstanding the foregoing, there will be no proration of taxes among the parties pursuant to this provisions for which the payor is entitled to or has received a reimbursement from USPS.

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b. All rent and other amounts payable under the Lease shall be prorated as of 12:01 a.m. on the Closing Date. Seller shall be charged with, and Purchaser shall receive, a credit against the Purchase Price for (i) any rent and other amounts collected by Seller or the Contributed Entity with respect to the Property prior to the Closing Date, but applicable to any period after the Closing Date and (ii) any security deposits held by Seller or the Contributed Entity with respect to the Property and prepaid rents received by Seller or the Contributed Entity with respect to the Property under the Lease. Rent is deemed to be delinquent when payment thereof is due on or prior to Closing but has not been made by Closing. Delinquent rent shall be prorated between Purchaser and Seller as of the Closing as if Seller or the Contributed Entity had received such rent and consequently, Seller shall not be entitled to any credit or increase to the Purchase Price as a result of such delinquent rent. Seller is permitted to pursue Tenant for delinquent rent that was due prior to Closing, but agrees to do so in a commercially reasonable manner (provided, however, that: (a) Seller shall not seek to have Tenant’s possession of the Land and the Improvements under the Lease terminated; and (b) Seller shall not be entitled to any rent received from Tenant after the Closing unless Tenant is current in its rent obligations to Purchaser for periods occurring from and after Closing). Delinquent rent collected by Purchaser (if any), net of the costs of collection (including attorneys’ fees), shall be applied first against those amounts currently due (or to be due within ten (10) days) and then to amounts most recently overdue. Any payments due to Seller as a result of collected delinquent rent shall be payable by Purchaser to Seller upon receipt thereof. In the event Seller receives the rental check from Tenant after the Closing, and it was not a part of the rent proration, Seller shall immediately remit to Purchaser the full amount of the check received. Both parties acknowledge that USPS rents are paid in arrears, at the end of month, and shall be adjusted accordingly.

c. All other income and operating expenses of the Contributed Entity or the Property, including, without limitation, public utility charges, maintenance, management, and other service charges, and all other normal operating charges shall be prorated as of the Closing Date based upon the best available information (it being understood that, unless otherwise indicated, Seller, on behalf of the Contributed Entity, shall pay all amounts due with respect to the Property that accrue prior to the Closing Date), or, in Purchaser’s sole discretion, moved into Purchaser’s name as of the Closing Date.

d. With respect to leasing commissions, tenant finish costs, costs associated with architectural plans and specifications, utility splits, and demising costs, if any, Seller shall be responsible for the payment of all such costs at the Closing.

e. For purposes of proration only, Purchaser is deemed to own on the Property on the Closing Date.

f. This Section 3.06 shall not merge with the Deed and shall survive the Closing.

ARTICLE IV.

REPRESENTATIONS AND WARRANTIES AND COVENANTS

4.01 Representations and Warranties of Seller. Each Seller, severally and not jointly, hereby represents and warrants to Purchaser, both as of the Effective Date and as of the Closing Date, as follows:

a. The Contributed Entity is a limited liability company duly formed, validly existing and in good standing under the laws of the State of North Carolina.

b. Seller and the Contributed Entity, as applicable, has good, indefeasible and marketable fee simple title to the Contributed Interests and the Land and the Improvements and good title to the Personal Property, free and clear of any liens or security interests.

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c. Seller has all requisite power and authority, and has taken all actions required by its organizational documents and to authorize it to execute and deliver this Agreement and the closing documents. The individual(s) executing this Agreement and any other documents and instruments executed by Seller pursuant hereto has the legal power, right, and actual authority to bind Seller to the terms and conditions hereof and thereof.

d. The rent roll for the Property, delivered to Purchaser, is true, correct and complete in all material respects. The list of Service Contracts and Warranties, delivered to Purchaser, is true, correct and complete in all material respects.

e. To Seller’s actual knowledge, the Contributed Entity is not in default of any of its obligations under the Lease and no event has occurred which with notice., the passing of time or both, would constitute a default or an event of default under the Lease.

f. To Seller’s actual knowledge, there are no leasing commissions, tenant finish costs, costs associated with architectural plans and specifications, utility splits, or demising costs payable by the landlord under the Lease from and after the Closing Date.

g. To Seller’s actual knowledge, the Contributed Entity is not in default of any of its obligations under the Service Contracts and no event has occurred which with notice, the passing of time or both, would constitute a default or an event of default under any of the Service Contracts.

h. There is no action, claim, lawsuit, litigation or proceeding pending against or with respect to the Contributed Entity and the Property or against Seller (which would materially adversely affect the Contributed Entity or the Property, or which would materially impair or otherwise materially affect Seller’s or the Contributed Entity’s ability to perform its obligations hereunder), and to the actual knowledge of Seller, no such action, claim, lawsuit, litigation or proceeding has been made or threatened.

i. Seller has not received notice of any pending or contemplated taking or condemnation of all or any portion of the Property.

j. To the actual knowledge of Seller, (i) neither the Contributed Entity nor the Property is in violation of any law, code, ordinance, permit, license or restriction applicable to the Contributed Entity or the Property, and (ii) hazardous wastes or hazardous substances are not currently present and have not been stored, handled, installed, released, discharged or disposed of in, on, under or about the Property.

k. Seller is not a “foreign person” as that term is defined in Section 1445 of the Internal Revenue Code of 1986, as amended, and any applicable regulations promulgated thereunder.

1. There do not exist any rights of first refusal or first offer or options to purchase the Property or the Contributed Interests.

m. Neither Seller nor the Contributed Entity has made a general assignment for the benefit of creditors, filed any voluntary petition in bankruptcy or suffered the filing of an involuntary petition by its creditors, suffered the appointment of a receiver to take possession of substantially all of its assets, suffered the attachment or other judicial seizure of substantially all of its assets, admitted its inability to pay its debts as they come due, or made an offer of settlement, extension or composition to its creditors generally.

n. All bills for work done by Seller or materials furnished to the Contributed Entity with respect to the Property by Seller have been paid in full or will be paid in full and discharged by the Closing Date.

o. Seller is not acting, directly or indirectly for, or on behalf of, any person, group, entity or nation named by any Executive Order (including the September 24, 2001, Executive Order Blocking Property and Prohibiting Transactions With Persons Who Commit, Threaten to Commit, or Support Terrorism) or the United States Treasury Department as a terrorist, “Specially Designated National and Blocked Person,” or other banned or blocked person, entity, or nation pursuant to any law that is enforced or administered by the Office of Foreign Assets Control, and is not engaging in this transaction, directly or indirectly, on behalf of, or instigating or facilitating this transaction, directly or indirectly, on behalf of, any such person, group, entity or nation.

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p. Seller shall be responsible for maintenance enforced by the USPS prior to the Closing, even if the United States Postal Services enforces such maintenance obligations of Seller subsequent to the Closing;

4.02 Representations and Warranties of Purchaser. Purchaser represents and warrants to Seller that Purchaser has all requisite power and authority, has taken all actions required by its organizational documents and applicable law, and has obtained all consents which are necessary to authorize or enable it to execute and deliver this Agreement.

4.03 Survival. The representations and warranties in this Article IV shall survive the Closing for a period of twenty-four (24) months in relation to Section 4.01(p) and twelve (12) months, but no further, in relation to the remainder of this Article IV.

4.04 Covenants and Agreements of Seller. Seller covenants and agrees with Purchaser that from the Effective Date until the Closing Date:

a. From and after the Effective Date until the Closing Date, Seller shall continue the operation of the Contributed Entity and the Property as presently operated and in accordance with prudent business practices, and maintain the Property in its present condition, ordinary wear and tear excepted. Should any equipment, fixtures or services fail between the Effective Date and the Closing Date for which Seller is responsible, Seller shall be responsible for the repair or replacement of such equipment, fixtures or services with a unit of similar size and quality, or at Purchaser’s option, Seller shall give Purchaser a settlement statement credit for the cost of such repair or replacement. From and after the Effective Date until the Closing Date, Seller shall not knowingly violate or allow the violation of any applicable laws with respect to the Property and the Contributed Entity. From and after the Effective Date until the Closing Date, Seller shall do or cause to be done all things reasonably within its control to comply with any and all easements, grants, appurtenances, privileges and licenses encumbering the Property. Further, Seller agrees to pay, as and when due, whether on its own behalf or on behalf of the Contributed Entity, all costs and expenses which have accrued prior to the Closing Date on any encumbrances presently affecting the Property.

b. Seller shall notify Purchaser of any litigation, arbitration, administrative hearing or condemnation proceeding before any court or governmental agency concerning or affecting the Contributed Entity or the Property which is instituted or threatened after the Effective Date.

c. Seller shall not enter into any new lease agreement covering all or any portion of the Property or amend or terminate the Lease without the prior written consent of Purchaser.

d. Seller shall promptly deliver to Purchaser copies of any written notice received from Tenant of its election to vacate any leased premises or terminate the Lease or claiming a default under the Lease.

e. Seller shall not remove any of the Personal Property from the Property, unless Seller shall replace the removed items with similar items of comparable quality and utility.

f. Seller will not enter into any agreement or contract with respect to the Contributed Entity or the Property or amend any of the Service Contracts without the prior written consent of Purchaser.

g. Seller shall maintain the current or materially similar insurance coverage on the Contributed Entity and the Property.

h. Seller shall perform all of its obligations under the Lease and the Service Contracts.

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ARTICLE V.

CASUALTY AND CONDEMNATION

5.01 [***]

5.02 [***]

ARTICLE VI.

PROVISIONS WITH RESPECT TO DEFAULT

6.01 Default by Seller. In the event Seller fails to perform any of its obligations under this Agreement at any time when Purchaser is not in default hereunder, Purchaser may, at its election and as its sole and exclusive remedy (except as provided in the following sentence), either (a) terminate this Agreement, receive full payment of the Escrow Deposit from the Title Company and recover from Seller its verifiable out-of-pocket expenses incurred in connection with Purchaser’s performance hereunder, or (b) enforce specific performance of this Agreement against Seller.

6.02 Default by Purchaser. In the event Purchaser fails to purchase the Property for any reason, except for a default by Seller as provided in Section 6.01 above or the termination by Purchaser of this Agreement pursuant to a right of termination expressly granted to Purchaser hereunder, Seller may, at its election and as its sole and exclusive remedy, terminate this Agreement and receive the full Escrow Deposit from the Title Company as liquidated damages. The parties have agreed that Seller’s actual damages, in the event of Purchaser’s failure to close in breach hereof, would be extremely difficult or impracticable to determine. Therefore, the parties expressly acknowledge that the Escrow Deposit has been agreed upon, after negotiation, as the parties’ reasonable estimate of Seller’s damages.

ARTICLE VII.

MISCELLANEOUS

7.01 Brokerage Fees and Commissions. Seller and Purchaser each represent and warrant to the other that they have not dealt with any real estate agent or broker in connection with the transaction evidenced by this Agreement. If any claims for brokerage commissions or fees are ever made against Seller or Purchaser in connection with this transaction, all such claims shall be handled and paid by the party whose commitments form the basis of such claims. Seller and Purchaser each agree to indemnify and hold harmless the other from and against any and all such claims or demands with respect to any brokerage fees or agents’ commissions or other compensation asserted by any person, firm, or corporation in connection with this Agreement or the transactions contemplated herein insofar as any such claim or demand is based upon a contract or commitment of the indemnifying party.

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7.02 Audit. In the event that Purchaser requires additional reasonable information from Seller, for accounting or tax purposes, Seller shall reasonably accommodate Purchaser’s request.

7.03 Notices. Any notice to be given or to be served upon any party hereto, in connection with this Agreement, must be in writing, and may be given by personal delivery, overnight mail, facsimile transmission or email. Notices given by personal delivery shall be deemed given on when received; overnight mail shall be deemed given on the next business day after mailing; and facsimile transmission or email shall be deemed given and received as of the time and date set forth on the electronic confirmed receipt of transmission of the sender. Such notices shall be given to the parties hereto at the following addresses:

Seller:	Gary L. Poelstra Hugh B. Barwick, Jr. Benjamin C. Barwick 1911 Sunset Avenue Clinton, NC 28328 Email: hbbarwick@embarqmail.com             bencbarwick@gmail.com
with a copy to:	Manning, Fulton & Skinner, P.A. 3605 Glenwood Avenue, Suite 500 Raleigh, NC 27612 Attn: Barry D. Mann, Esquire Email: mann@manningfulton.com Fax: (919) 325-4616
Purchaser:	Postal Realty LP 75 Columbia Avenue Cedarhurst, NY 11516 Attn: Carrie Herz, Esq. Email: cherz@nostalrealty.com Fax: (646) 506-3197
with a copy to:
	Attn:
	Email:

Any party hereto may, at any time by giving five (5) days’ written notice to the other party hereto, designate any other address in substitution of the foregoing address to which such notice shall be given.

7.04 Entire Agreement; Modification. This Agreement embodies and constitutes the entire understanding among the parties with respect to the transactions contemplated herein, and all prior or contemporaneous agreements, understandings, representations and statements, oral or written, are merged into this Agreement. Neither this Agreement nor any provision hereof may be waived, modified, amended, discharged or terminated except by an instrument in writing signed by the party against which the enforcement of such waiver, modification, amendment, discharge or termination is sought, and then only to the extent set forth in such instrument.

7.05 Headings. Descriptive headings are for convenience only and shall not control or affect the meaning or construction of any provision of this Agreement.

7.06 Binding Effect. This Agreement shall be binding upon and shall inure to the benefit of the parties hereto and their successors and assigns, provided that except as provided in Section 7.09 below, no assignment shall be made by either party without the prior written consent of the other party.

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7.07 Days: If the final date of any period which is set out in any provision of this Agreement or the Closing Date falls on a Saturday, Sunday or legal holiday under the laws of the United States or the State of New York, then the time of such period or the Closing Date, as the case may be, shall be extended to the next calendar day which is not a Saturday, Sunday or legal holiday.

7.08 Multiple Counterparts; Facsimile Signatures. This Agreement may be executed in a number of identical counterparts, each of which for all purposes is deemed an original, and all of which constitute collectively one agreement, but in making proof of this Agreement, it shall not be necessary to produce or account for more than one such counterpart. Signatures to this Agreement may be transmitted via facsimile and/or scanned and e-mailed and delivery thereby^- shall be deemed sufficient for all purposes to the same extent as would be delivery of an original signature.

7.09 Assignment by Purchaser. Notwithstanding Section 7.06 above, Purchaser shall have the right to assign (without recourse) its rights under this Agreement to an affiliated entity designated by Purchaser to acquire the Property.

7.10 Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of New York, without giving effect to the principles of conflicts of laws.

7.11 Attorneys’ Fees. Should either party hereto institute any action or proceeding in court to enforce this Agreement, the prevailing party in any such action or proceeding shall be entitled to receive from the non-prevailing party all reasonable attorneys’ fees and court costs in connection with such action or proceeding

7.12 Reporting Person. The Title Company is hereby designated as the “Reporting Person” pursuant to Section 6045 of the Internal Revenue Code and the Regulations promulgated thereunder.

7.13 Construction. The parties acknowledge and agree that the parties and their counsel have reviewed this Agreement and this Agreement shall not be presumptively interpreted against either party.

7.14 Severability. In the event any provision of this Agreement is held to be invalid, illegal, or unenforceable by a court of competent jurisdiction, the invalid, illegal or unenforceable provision shall not affect any other provisions, and this Agreement shall be construed as if the invalid, illegal, or unenforceable provision is severed and deleted from this Agreement.

7.15 Gender; Number. Unless the context requires otherwise, all pronouns used in this Agreement shall be construed to include the other genders, whether used in the masculine, feminine or neuter gender. Words in the singular number shall be construed to include the plural, and words in the plural shall be construed to include the singular.

7.16 1031 Exchange. It is understood that either Purchaser or Seller may choose to enact a 1031 Tax Exchange and agreed that both parties will cooperate at no cost or delay to either party.

7.17 Confidentiality: It is understood that the information in this contract must remain confidential. Seller shall not disclose information herein, unless necessary to facilitate the terms of the Contract.

7.18 Preparation of Financial Statements. At Purchaser’s request, at any time prior to or after the Closing, Seller shall provide Purchaser’s designated independent auditor access to the books and records of each Property that are necessary for compliance with Purchaser’s obligations under the federal securities laws, mandating preparation of financial statements in accordance with Rule 3-14 of Regulation S-X, as it may be amended or modified by the United States Securities and Exchange Commission from time to time, and Seller shall provide to such auditor a representation letter regarding the books and records of the Property, in a form each satisfactory to such auditor.

7.19 Duration of Offer: If this offer is not accepted by Seller on or before 5:00 pm EDT on July 19, 2019 and delivered to the undersigned, it shall be deemed automatically revoked.

(Signatures on following page)

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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year first above written; provided, however, that for the purpose of determining “the Effective Date,” as used in this Agreement, such date shall be the last date any of the parties hereto executes this Agreement.

SELLER:
BY:	/s/ Hugh B. Barwick, Jr.
Name:	Hugh B. Barwick, Jr.
Date of Execution: July 16, 2019
By:	/s/ Benjamin C. Barwick
Name:	Benjamin C. Barwick
Date of Execution: 7-16, 2019
By:	/s/ Gary L. Poelstra
Name:	Gary L. Poelstra
Date of Execution: 7-16, 2019
PURCHASER:
Postal Reality LP
A Delaware Limited Partnership
By:	Postal Reality Trust Inc, sole general partner
Name:	Andrew Spodek
Title:	Authorized Signatory
Date of Execution: July 16, 2019

Signature page to Agreement of Purchase and Sale

EX-10.3

Exhibit 10.3

EXECUTION VERSION

*Certain identified information has been excluded from this exhibit because it is
both (i) not material and (ii) would be competitively harmful if publicly disclosed.
The redacted confidential portions of the exhibit are marked by [***].

AGREEMENT OF PURCHASE AND SALE

BY AND BETWEEN

Postal Realty LP

and

Coharie, Incorporated

Dated: July 16, 2019

AGREEMENT OF PURCHASE AND SALE

This AGREEMENT OF PURCHASE AND SALE (this “Agreement”), is made and entered into this 16^th day of July, 2019 (the “Effective Date”), by and between Coharie, Incorporated, a North Carolina Corporation (“Seller”), and Postal Realty LP, a Delaware Limited Partnership (“Purchaser”).

ARTICLE I.

SALE AND PURCHASE OF THE PROPERTY

1.01 Agreement to Sell and Convey. Seller hereby agrees to sell and convey to Purchaser, and Purchaser hereby agrees to purchase from Seller, subject to the terms and conditions hereinafter set forth, (a) that certain real property being described on Exhibit “A” attached hereto and made a part hereof for all purposes, and all rights and appurtenances pertaining thereto including, without limitation, (i) all right, title and interest of Seller in and to adjacent streets, roads, alleys and rights-of-way, and any awards made or to be made in connection therewith, (ii) all rights of Seller in and to all easements appurtenant to or benefiting such parcels of land, (iii) all development rights, air rights, water rights and mineral rights and interests pertaining to such land, (iv) all strips and gores of land lying adjacent to such land (collectively, the “Land”), (b) all buildings, fixtures and improvements located on the Land (collectively, the “Improvements”), (c) all furniture, fixtures, equipment, machines, apparatus, supplies and personal property of every nature and description and all replacements thereof now owned by Seller and located in or on the Land and the Improvements, including, all of the right, tite and interest of Seller in and to any and all intangible personal property related to the Land and the Improvements, including, without limitation, all trade names and trademarks associated with the Land and the Improvements, (collectively, the “Personal Property”), but expressly excluding any personal property of USPS (hereinafter defined), and (d) the Land, the Improvements, the Personal Property, the Lease (as hereinafter defined), the Warranties (as hereinafter defined) and all such other rights, interests and properties are collectively called the “Property”.

1.02 Purchase Price. The purchase price (the “Purchase Price”) to be paid by Purchaser for the Property shall be THREE HUNDRED TWENTY-NINE THOUSAND AND NO/100 DOLLARS ($329,000.00). It is the intent of the parties that such transaction be treated as a sale unless otherwise permitted by applicable law. The Purchase Price shall be paid by delivery of immediately available funds to the Title Company (as hereinafter defined) at the Closing (as hereinafter defined).

1.03 Earnest Money Deposit. For the purpose of securing the performance of Purchaser under this Agreement, within seven (7) business days after the Effective Date, Purchaser shall deliver to First American Title Company Attn: ______________ (the “Title Company”), an earnest money deposit in the amount of Ten Thousand and No/100 Dollars ($10,000.00) (the “Escrow Deposit”). The Escrow Deposit shall be held and disbursed by the Title Company in accordance with the terms of this Agreement. At the Closing, the Escrow Deposit shall be combined with the balance of the Purchase Price and delivered to Seller by the Title Company.

1.04 Inspection Period.

a. Purchaser shall have a period of [***] days after Purchaser’s receipt of the documents described in Section 1.04(b) below (such period being called the “Inspection Period”) within which to make all inspections and investigations desired by Purchaser with respect to the Property. If, within the Inspection Period, Purchaser determines that it does not desire to purchase any or all Properties listed on Exhibit A for any reason, or for no reason, Purchaser shall have the right to terminate this Agreement, in whole or in part, by written notice delivered to Seller and the Title Company prior to 5:00 p.m., New York City time, on the final day of the Inspection Period and upon any such termination, the Escrow Deposit shall be immediately delivered to Purchaser and this Agreement shall be of no further force and effect. If Purchaser eliminates individual properties, the purchase price shall be decreased in accordance with the purchase price allocated on Exhibit A.

b. Within three (3) days after the Effective Date, Seller shall, at its sole cost and expense, deliver or make available to Purchaser the following, to the extent in Seller’s possession:

(i) Copies of Seller’s owner title policy for the Property, existing survey of the Property, any and all engineering, structural, termite, property condition, soil or environmental reports relating to the Property and any plans and specifications or other architectural drawings for the Property which are in the possession or under the control of Seller;

(ii) Copies of all pleadings and other documents relating to any action, suit or proceeding involving Seller or the Property and which is currently pending;

(iii) A copy of each agreement between Seller and a third party pursuant to which such third party provides goods or services to or with respect to the Property and all amendments thereto (collectively, the “Service Contracts”);

(iv) A list of all contractors and vendors (with phone numbers) that have been servicing the Property the past three (3) years, and copies of any accepted proposals for work completed in the past three (3) years with confirmation the work was completed and paid for;

(v) Copies of all bonds, guarantees and warranties relating to the Property (collectively, the “Warranties”) currently existing or recently expired (within 5 years);

(vi) Copies of the real estate property tax and utility bills applicable to the Property for the past thirty-six (36) months;

(vii) Copies of all existing or recently expired extended coverage insurance policies, comprehensive general liability insurance policies, and any other insurance binders and paid invoices pertaining to the Property, including but not limited to a copy of the Insurance Loss Run Statement, or the ability for Seller’s insurance company to provide to Purchaser;

(viii) Copies of the fully executed lease and all amendments thereto (the “Lease”) with the United States Postal Service (“USPS” or sometimes referred to herein as the “Tenant”);

(ix) Copies of any correspondence to and from the USPS or their agents for the past 5 years;

(x) Copy of a 1099 from USPS for the current year;

(xi) Building plans or blueprints;

(xii) Copies of Seller’s formation and organizational documents; and

(xiii) Copies of the books and records maintained in connection with the ownership, management and operation of the Property, Seller’s signed tax return (or Schedule E), the income and expense statement, cash flow and other financial statements of Tenant, and the operating statements prepared by or on behalf of Seller with respect to the Property for the past 36 months, including rent, real estate taxes, real estate tax reimbursements, insurance claims, utilities, repairs and maintenance. Purchaser and its agents and representatives shall be entitled to enter upon the Property for inspection, studies, testing and examination prior to the Closing. Without limitation of the foregoing, Seller shall make available to Purchaser at the·Property all files of Seller containing correspondence relating to the Lease, the Service Contracts, the Personal Property and any other matters relating to the Property.

c. From and after the Effective Date, Purchaser shall have the right to deliver a written notice to Seller directing Seller to terminate one (1) or more of the Service Contracts prior to the Closing (such notice being called the “Service Contract Termination Notice”). If Purchaser delivers the Service Contract Termination Notice to Seller, the Service Contracts described therein shall be terminated by Seller at or prior to the Closing and at Purchaser’s sole cost and expense.

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d. In addition to the materials to be provided by Seller pursuant to Section l.04(b) above, from and after the Effective Date, Seller shall immediately deliver to Purchaser any and all new documentation that may come into Seller’s possession or knowledge from and after the Effective Date related to the Property, the Lease, the Service Contracts, and any other new leases or renewals of Lease or Service Contracts, including, without limitation, lease proposals, notice letters, letters of intent and any other writing related to the foregoing. During the pendency of this Agreement, Seller shall not execute any contracts, leases or any other agreements relating the Property or the Tenant without Purchaser’s consent, which consent shall not be unreasonably withheld, delayed or conditioned.

e. The Property shall be sold and conveyed on an “AS IS, WHERE IS” basis and in its present condition; however, only to the extent not handled by Tenant, Seller shall ensure that (1) all mechanical systems shall be in working order, including but not limited to, heating, air conditioning and electricity, (2) the Property shall be delivered free from leaks, and (3) the outside of the Property shall be maintained in its current condition.

ARTICLE II.

SURVEY AND TITLE COMMITMENT; PERMITTED EXCEPTIONS

2.01 Preliminary Title Report. Purchaser, at Purchaser’s sole cost and expense, shall cause the Title Company to issue and deliver to Purchaser a title commitment, update or abstract issued by the Title Company, accompanied by a legible copy of all recorded documents affecting the title to the Property and which would constitute encumbrances, restrictions, reservations or easements against the Property at the Closing (collectively, the “Title Commitment”). Within twenty (20) days after the Effective Date, Purchaser shall deliver written notice to Seller if the condition of title to the Property as set forth in Title Commitment [***] described in Section 2.02 below is not satisfactory to Purchaser (such notice being called the “Objection Notice”). Within seven (7) days of Seller’s receipt of the Objection Notice, Seller shall respond to Purchaser in writing (the “Seller’s Reply”) whether or not Seller will attempt to or can cure the unsatisfactory conditions to title. If Seller agrees to cure the unsatisfactory condition of title, such cure shall occur, if possible, prior to the Closing Date. However, if Seller is unwilling or unable to cure Purchaser’s objections as indicated in Seller’s Reply, then Purchaser, within seven (7) days of the receipt of Seller’s Reply, may elect to either (a) terminate this Agreement and receive a refund of the Escrow Deposit, or (b) proceed with the Closing without any reduction in the Purchase Price.

2.02 [***]

2.03 Environmental Report. At the completion of the Inspection Period, but prior to Closing, Purchaser shall order a preliminary Environmental Report or a Phase I Environmental Report at Purchaser’s sole discretion. If such report presents an environmental issue, Purchaser may cancel this Agreement at any time, including after the Inspection Period.

ARTICLE III.

CLOSING

3.01 Closing Date. The consummation of the transactions contemplated by this Agreement (the “Closing”) shall take place in the offices of the Title Company via mail within thirty (30) days after the expiration of the Inspection Period (such date being called the “Closing Date”) time being of the essence.

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3.02 Seller’s Obligations at Closing. At the Closing, Seller shall do the following:

a. Execute, acknowledge, and deliver to Purchaser a Postal Service Form “Certificate of Transfer of Title to Leased Property and Lease Assignment and Assumption”, along with (i) originals of the Lease and any amendment, and (ii) a rent roll for the Property dated as of the Closing Date (only if there is more than one tenant) and made a part hereof for all purposes and certified by Seller to be true, correct and complete in all material respects.

b. Execute, acknowledge, and deliver to Purchaser a special or limited warranty deed (or its local equivalent), as is customary for commercial transactions in the jurisdiction where the Land is located (the “Deed”) conveying the Land and the Improvements to Purchaser, subject only to the exceptions approved by Purchaser during its review of the Title Commitment (the “Permitted Exceptions”). The legal description of the Land conveyed by the Deed shall match the legal description of the Land shown on the Survey, the USPS lease and the tax plat map, and if same is not possible, then such differences must be reconciled prior to Closing Date, provided that any title warranties from Seller in the Deed shall be limited to the Property as described in the deeds conveying the Property to Seller.

c. Execute and deliver to the Title Company a certification of non-foreign status of Seller pursuant to Section 1445 of the Internal Revenue Code of 1986, as amended.

d. Execute and deliver an affidavit that there will be no unpaid bills or claims for labor performed or materials furnished, or contracted to be performed or furnished, upon the Property and to Seller’s actual knowledge that no environmental conditions exist.

e. Deliver such organizational and authority documents of Seller as the Title Company may reasonably require in connection with the Closing.

f. Execute and deliver such other documents as the Title Company may reasonably require in connection with the Closing including, without limitation, a closing statement, all transfer tax and conveyance documents and forms, and one (1) or more accurate affidavits regarding debts, liens and possession of the Property.

g. Cooperate in the furnishing and delivery by the Title Company to Purchaser, at the sole cost of Purchaser and at Purchaser’s discretion, an ALTA owner policy of title insurance issued by the Title Company insuring fee simple title to the Property in Purchaser in a face amount equal to the Purchase Price, and containing no exceptions other than the Permitted Exceptions and including such endorsements as may be specified by Purchaser at Purchaser’s sole expense (collectively, the “Policy”).

h. Deliver to Purchaser all keys or other access devices in the actual possession of Seller to all locks located in the Property.

i. Deliver to Purchaser originals, or, if any originals are not in Seller’s actual possession copies, certified as being true, correct and complete in all material respects, of the Lease, the Service Contracts, the Warranties, and all plans, governmental approvals, licenses, permits, and other contracts and agreements relating to the ownership and operation of the Property.

j. Deliver to Purchaser copies of the complete building file and all books and records pertaining to the operation of the Property in the actual possession of Seller.

3.03 Purchaser’s Obligations at Closing. Contemporaneously with the performance by Seller of its obligations set forth in Section 3.02 above, Purchaser shall do the following at the Closing:

a. Pay to Seller (or cause the Title Company to pay to Seller) the Purchase Price as provided in Section 1.02 above.

b. Deliver such organizational and authority documents of Purchaser as the Title Company may reasonably require in connection with the Closing.

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c. Execute and deliver such other documents as the Title Company may reasonably require in connection with the Closing including, without limitation, a closing statement.

3.04 [***]

3.05 Conditions to Purchaser’s Obligations. Purchaser’s obligation to purchase the Property under this Agreement is subject to the satisfaction of each of the following conditions, any of which may be waived in whole or in part only in writing by Purchaser at or prior to the Closing Date:

a. Seller shall have delivered to the Title Company the items described in Section 3.02 above and shall otherwise have performed its obligations under Section 3.02 above.

b. There shall be no breach of any of Seller’s representations and warranties or covenants set forth in Article IV below as of the Closing Date.

c. Purchaser shall not have terminated this Agreement in accordance with Sections 1.04 or 2.01 hereof.

d. Intentionally deleted

e. Title to the Property shall be fee simple marketable title. In the event the title to the Property should prove to be unmarketable due to circumstances that occurred after the process set forth in Section 2.01 had elapsed, then Purchaser reserves the further right to object to, and Seller reserves the right to cure, the newly discovered unmarketable condition. If the unmarketable condition of title cannot be or is not cured by Seller, then Purchaser shall have a right to terminate the Agreement or to purchase the Property without a reduction in the Purchase Price.

f. Seller affirms that (i) the Lease is in full force and effect, (ii) there is no default by Tenant under the Lease nor has there been notice or demand for its cancellation, (iii) that USPS is occupying the Property and is paying rental due under the Lease, and (iv) there is no outstanding maintenance on the Property.

In the event any of such conditions are not satisfied or waived by Purchaser in writing, Purchaser shall have the right to terminate this Agreement by written notice to Seller and upon any such termination the Escrow Deposit shall be refunded to Purchaser.

3.06 Prorations. The following items shall be prorated between Seller and Purchaser (with Purchaser deemed to be holding title as of the Closing Date):

a. All ad valorem and other real estate taxes with respect to the Property (collectively, the “Taxes”) shall be prorated as of 12:01 a.m. on the Closing Date. If the Closing shall occur before the tax rate is fixed for the then current year, the apportionment of the Taxes shall be made upon the basis of the tax rate for the immediately preceding tax year applied to the latest assessed valuation of the Property. Within thirty (30) days after the actual amount of the Taxes for the year in which the Closing occurs are determined, Seller and Purchaser shall adjust the proration of the Taxes and Seller or Purchaser, as the case may be, shall pay to the other any amount required as a result of such adjustment. All unpaid taxes and taxes assessed against the Property for prior years due to a change in use or ownership of the Property shall be paid by Seller. Notwithstanding the foregoing, there will be no proration of taxes between the parties pursuant to this provision for which the payor is entitled to or has received a reimbursement from USPS.

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b. All rent and other amounts payable under the Lease shall be prorated as of 12:01 a.m. on the Closing Date. Seller shall be charged with and Purchaser shall receive a credit against the Purchase Price for (i) any rent and other amounts collected by Seller prior to the Closing Date, but applicable to any period after the Closing Date and (ii) any security deposits held by Seller and prepaid rents received by Seller under the Lease. Rent is deemed to be delinquent when payment thereof is due on or prior to Closing but has not been made by Closing. Delinquent rent shall be prorated between Purchaser and Seller as of the Closing as if Seller had received such rent and consequently, Seller shall not be entitled to any credit or increase to the Purchase Price as a result of such delinquent rent. Seller is permitted to pursue Tenant for delinquent rent that was due prior to Closing, but agrees to do so in a commercially reasonable manner (provided, however, that: (a) Seller shall not seek to have Tenant’s possession of the Land and the Improvements under the Lease terminated; and (b) Seller shall not be entitled to any rent received from Tenant after the Closing unless Tenant is current in its rent obligations to Purchaser for periods occurring from and after Closing). Delinquent rent collected by Purchaser (if any), net of the costs of collection (including attorneys’ fees), shall be applied first against those amounts currently due (or to be due within ten (10) days) and then to amounts most recently overdue. Any payments due to Seller as a result of collected delinquent rent shall be payable by Purchaser to Seller upon receipt thereof. In the event Seller receives the rental check from Tenant after the Closing, and it was not a part of the rent proration, Seller shall immediately remit to Purchaser the full amount of the check received. Both parties acknowledge that USPS rents are paid in arrears, at the end of month, and shall be adjusted accordingly.

c. All other income and operating expenses of the Property, including, without limitation, public utility charges, maintenance, management, and other service charges, and all other normal operating charges shall be prorated as of the Closing Date based upon the best available information (it being understood that, unless otherwise indicated, Seller shall pay all amounts due with respect to the Property that accrue prior to the Closing Date), or, in Purchaser’s sole discretion, moved into Purchaser’s name as of the Closing Date.

d. With respect to leasing commissions, tenant finish costs, costs associated with architectural plans and specifications, utility splits, and demising costs, if any, Seller shall be responsible for the payment of all such costs at the Closing.

e. For purposes of proration only, Purchaser is deemed to own the Property on the Closing Date.

f. This Section 3.06 shall not merge with the Deed and shall survive the Closing.

ARTICLE IV.

REPRESENTATIONS AND WARRANTIES AND COVENANTS

4.01 Representations and Warranties of Seller. Seller hereby represents and warrants to Purchaser, both as of the Effective Date as of the Closing Date, as follows:

a. Seller is a corporation duly formed, validly existing and in good standing under the laws of the State of North Carolina.

b. Seller has good, indefeasible and marketable fee simple title to the Land and the Improvements and good title to the Personal Property, free and clear of any liens or security interests.

c. Seller has all requisite power and authority, and has taken all actions required by its organizational documents and to authorize it to execute and deliver this Agreement and the closing documents. The individual(s) executing this Agreement and any other documents and instruments executed by Seller pursuant hereto has the legal power, right, and actual authority to bind Seller to the terms and conditions hereof and thereof.

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d. The rent roll for the Property, delivered to Purchaser, is true, correct and complete in all material respects. The list of Service Contracts and Warranties, delivered to Purchaser, is true, correct and complete in all material respects.

e. To Seller’s actual knowledge, Seller is not in default of any of its obligations under the Lease and no event has occurred which with notice, the passing of time or both, would constitute a default or an event of default under the Lease.

f. To Seller’s actual knowledge, there are no leasing commissions, tenant finish costs, costs associated with architectural plans and specifications, utility splits, or demising costs payable by the landlord under the Lease from and after the Closing Date.

g. To Seller’s actual knowledge, Seller is not in default of any of its obligations under the Service Contracts and no event has occurred which with notice, the passing of time or both, would constitute a default or an event of default under any of the Service Contracts.

h. There is no action, claim, lawsuit, litigation or proceeding pending against or with respect to the Property or against Seller (which would materially adversely affect the Property, or which would materially impair or otherwise materially affect Seller’s ability to perform its obligations hereunder), and to the actual knowledge of Seller, no such action, claim, lawsuit, litigation or proceeding has been made or threatened.

i. Seller has not received notice of any pending or contemplated taking or condemnation of all or any portion of the Property.

j. To the actual knowledge of Seller, (i) the Property is not in violation of any law, code, ordinance, permit, license or restriction applicable to the Property, and (ii) hazardous wastes or hazardous substances are not currently present and have not been stored, handled, installed, released, discharged or disposed of in, on, under or about the Property.

k. Seller is not a “foreign person” as that term is defined in Section 1445 of the Internal Revenue Code of 1986, as amended, and any applicable regulations promulgated thereunder.

1. There do not exist any rights of first refusal or first offer or options to purchase the Property.

m. Seller has not made a general assignment for the benefit of creditors, filed any voluntary petition in bankruptcy or suffered the filing of an involuntary petition by its creditors, suffered the appointment of a receiver to take possession of substantially all of its assets, suffered the attachment or other judicial seizure of substantially all of its assets, admitted its inability to pay its debts as they come due, or made an offer of settlement, extension or composition to its creditors generally.

n. All bills for work done by Seller or materials furnished with respect to the Property by Seller have been paid in full or will be paid in full and discharged by the Closing Date.

o. Seller is not acting, directly or indirectly for, or on behalf of, any person, group, entity or nation named by any Executive Order (including the September 24, 2001, Executive Order Blocking Property and Prohibiting Transactions With Persons Who Commit, Threaten to Commit, or Support Terrorism) or the United States Treasury Department as a terrorist, “Specially Designated National and Blocked Person,” or other banned or blocked person, entity, or nation pursuant to any law that is enforced or administered by the Office of Foreign Assets Control, and is not engaging in this transaction, directly or indirectly, on behalf of, or instigating or facilitating this transaction, directly or indirectly, on behalf of, any such person, group, entity or nation.

p. Seller shall be responsible for maintenance enforced by the USPS prior to the Closing, even if the United States Postal Services enforces such maintenance obligations subsequent to the Closing;

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4.02 Representations and Warranties of Purchaser. Purchaser represents and warrants to Seller that Purchaser has all requisite power and authority, has taken all actions required by its organizational documents and applicable law, and has obtained all consents which are necessary to authorize or enable it to execute and deliver this Agreement.

4.03 Survival. The representations and warranties in this Article IV shall survive the Closing for a period of twenty-four (24) months in relation to Section 4.01 (p) and twelve (12) months but no further, in relation to the remainder of this Article IV.

4.04 Covenants and Agreements of Seller. Seller covenants and agrees with Purchaser that from the Effective date until the Closing Date:

a. From and after the Effective Date until the Closing Date, Seller shall continue the operation of the Property as presently operated and in accordance with prudent business practices, and maintain the Property in its present condition, ordinary wear and tear excepted. Should any equipment, fixtures or services fail between the Effective Date and the Closing Date for which Seller is responsible, Seller shall be responsible for the repair or replacement of such equipment, fixtures or services with a unit of similar size and quality, or at Purchaser’s option, Seller shall give Purchaser a settlement statement credit for the cost of such repair or replacement. From and after the Effective Date until the Closing Date, Seller shall not violate or allow the violation of any applicable laws. From and after the Effective Date hereof until the Closing Date, Seller shall do or cause to be done all things reasonably within its control to comply with any and all easements, grants, appurtenances, privileges and licenses encumbering the Property. Further, Seller agrees to pay, as and when due, all costs and expenses which have accrued prior to the Closing Date on any encumbrances presently affecting the Property.

b. Seller shall notify Purchaser of any litigation, arbitration, administrative hearing or condemnation proceeding before any court or governmental agency concerning or affecting the Property which is instituted or threatened after the Effective Date.

c. Seller shall not enter into any new lease agreement covering all or any portion of the Property or amend or terminate the Lease without the prior written consent of Purchaser.

d. Seller shall promptly deliver to Purchaser copies of any written notice received from Tenant of its election to vacate any leased premises or terminate the Lease or claiming a default under the Lease.

e. Seller shall not remove any of the Personal Property from the Property, unless Seller shall replace the removed items with similar items of comparable quality and utility.

f. Seller will not enter into any agreement or contract with respect to the Property or amend any of the Service Contracts without the prior written consent of Purchaser.

g. Seller shall maintain the current or materially similar insurance coverage on the Property.

h. Seller shall perform all of its obligations under the Lease and the Service Contracts.

ARTICLE V.

CASUALTY AND CONDEMNATION

5.01 [***]

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5.02 [***]

ARTICLE VI.

PROVISIONS WITH RESPECT TO DEFAULT

6.01 Default by Seller. In the event Seller fails to perform any of its obligations under this Agreement at any time when Purchaser is not in default hereunder, Purchaser may, at its election and as its sole and exclusive remedy (except as provided in the following sentence), either (a) terminate this Agreement, receive full payment of the Escrow Deposit from the Title Company and recover from Seller its verifiable out-of-pocket expenses incurred in connection with Purchaser’s performance hereunder, or (b) enforce specific performance of this Agreement against Seller.

6.02 Default by Purchaser. In the event Purchaser fails to purchase the Property for any reason, except for a default by Seller as provided in Section 6.01 above or the termination by Purchaser of this Agreement pursuant to a right of termination expressly granted to Purchaser hereunder, Seller may, at its election and as its sole and exclusive remedy, terminate this Agreement and receive the Escrow Deposit from the Title Company as liquidated damages. The parties have agreed that Seller’s actual damages, in the event of Purchaser’s failure to close in breach hereof, would be extremely difficult or impracticable to determine. Therefore, the parties acknowledge that the Escrow Deposit has been agreed upon, after negotiation, as the parties’ reasonable estimate of Seller’s damages.

ARTICLE VII.

MISCELLANEOUS

7.01 Brokerage Fees and Commissions. Seller and Purchaser each represent and warrant to the other that they have not dealt with any real estate agent or broker in connection with the transaction evidenced by this Agreement. If any claims for brokerage commissions or fees are ever made against Seller or Purchaser in connection with this transaction, all such claims shall be handled and paid by the party whose commitments form the basis of such claims. Seller and Purchaser each agree to indemnify and hold harmless the other from and against any and all such claims or demands with respect to any brokerage fees or agents’ commissions or other compensation asserted by any person, firm, or corporation in connection with this Agreement or the transactions contemplated herein insofar as any such claim or demand is based upon a contract or commitment of the indemnifying party.

7.02 Audit. In the event that he Purchaser requires additional reasonable information from Seller, for accounting purposes, Seller shall reasonably accommodate Purchaser’s request.

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7.03 Notices. Any notice to be given or to be served upon any party hereto, in connection with this Agreement, must be in writing, and may be given by personal delivery, overnight mail, facsimile transmission or email. Notices given by personal delivery shall be deemed given on when received; overnight mail shall be deemed given on the next business day after mailing; and facsimile transmission or email shall be deemed given and received as of the time and date set forth on the electronic confirmed receipt of transmission of the sender. Such notices shall be given to the parties hereto at the following addresses:

Seller:	Coharie, Incorporated Attn: Mr. Hugh B. Barwick, Jr. 1911 Sunset Avenue Clinton, NC 28328 Email: hbbarwick@embarqmail.com     bencbarwick@gmail.com
With a copy to:	Manning, Fulton & Skinner, PA 3605 Glenwood Avenue, Suite 500 Raleigh, NC 27612 Attn: Barry D. Mann, Esq. Fax: (919) 325-4616 Email: mann@manningfulton.com
Purchaser:	Postal Realty LP 75 Columbia Avenue Cedarhurst, NY 11516 Attn: Carrie Herz Fax: (646) 506 3197 Email: cherz@postalrealty.com

with a copy to:	_____________________________________
	_____________________________________
	_____________________________________
	Attn:________________________________
	Fax:__________________________________
	Email:________________________________

Any party hereto may, at any time by giving five (5) days’ written notice to the other party hereto, designate any other address in substitution of the foregoing address to which such notice shall be given.

7.04 Entire Agreement; Modification. This Agreement embodies and constitutes the entire understanding among the parties with respect to the transactions contemplated herein, and all prior or contemporaneous agreements, understandings, representations and statements, oral or written, are merged into this Agreement. Neither this Agreement nor any provision hereof may be waived, modified, amended, discharged or terminated except by an instrument in writing signed by the party against which the enforcement of such waiver, modification, amendment, discharge or termination is sought, and then only to the extent set forth in such instrument.

7.05 Headings. Descriptive headings are for convenience only and shall not control or affect the meaning or construction of any provision of this Agreement.

7.06 Binding Effect. This Agreement shall be binding upon and shall inure to the benefit of the parties hereto and their successors and assigns, provided that except as provided in Section 7.09 below, no assignment shall be made by either party without the prior written consent of the other party.

7.07 Days. If the final date of any period which is set out in any provision of this Agreement or the Closing Date falls on a Saturday, Sunday or legal holiday under the laws of the United States or the State of New York, then the time of such period or the Closing Date, as the case may be, shall be extended to the next date which is not a Saturday, Sunday or legal holiday.

7.08 Multiple Counterparts; Facsimile Signatures. This Agreement may be executed in a number of identical counterparts, each of which for all purposes is deemed an original, and all of which constitute collectively one agreement, but in making proof of this Agreement, it shall not be necessary to produce or account for more than one such counterpart. Signatures to this Agreement may be transmitted via facsimile and/or scanned and e-mailed and delivery thereby shall be deemed sufficient for all purposes to the same extent as would be delivery of an original signature.

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7.09 Assignment by Purchaser. Purchaser shall have the right to assign (without recourse) its rights under this Agreement to an affiliated entity designated by Purchaser to acquire the Property.

7.10 Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of New York without giving effect to the principles of conflicts of laws.

7.11 Attorneys’ Fees. Should either party hereto institute any action or proceeding in court to enforce this Agreement, the prevailing party in any such action or proceeding shall be entitled to receive from the non-prevailing party all reasonable attorneys’ fees and court costs in connection with such action or proceeding

7.12 Reporting Person. The Title Company is hereby designated as the “Reporting Person” pursuant to Section 6045 of the Internal Revenue Code and the Regulations promulgated thereunder.

7.13 Construction. The parties acknowledge and agree that the parties and their counsel have reviewed this Agreement and this Agreement shall not be presumptively interpreted against either party.

7.14 Severability. In the event any provision of this Agreement is held to be invalid, illegal, or unenforceable by a court of competent jurisdiction, the invalid, illegal or unenforceable provision shall not affect any other provisions, and this Agreement shall be construed as if the invalid, illegal, or unenforceable provision is severed and deleted from this Agreement.

7.15 Gender; Number. Unless the context requires otherwise, all pronouns used in this Agreement shall be construed to include the other genders, whether used in the masculine, feminine or neuter gender. Words in the singular number shall be construed to include the plural, and words in the plural shall be construed to include the singular.

7.16 1031 Exchange. It is understood that either Purchaser or Seller may choose to enact a 1031 Tax Exchange and agreed that both parties will cooperate at no cost or delay to either party.

7.17 Confidentiality: It is understood that the information in this contract must remain confidential. Seller shall not disclose information herein, unless necessary to facilitate the terms of the Contract.

7.18 Preparation of Financial Statements. At Purchaser’s request, at any time after the Closing, Seller shall provide Purchaser’s designated independent auditor access to the books and records of each Property that are necessary for compliance with Purchaser’s obligations under the federal securities laws, mandating preparation of financial statements in accordance with Rule 3-14 of Regulation S-X, as it may be amended or modified by the United States Securities and Exchange Commission from time to time, and Seller shall provide to such auditor a representation letter regarding the books and records of the Property, in a form each satisfactory to such auditor.

7.19 Duration of Offer: If this offer is not accepted by Seller on or before 5:00 pm EDT on July 19, 2019 and delivered to the undersigned it shall be deemed automatically revoked.

[Signatures on following page]

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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year first above written; provided, however, that for the purpose of determining “the date hereof,” as used in this Agreement, such date shall be the last date any of the parties hereto executes this Agreement.

SELLER:
Coharie, Incorporated
A North Carolina Corporation
By:	/s/ HUGH B. BARWICK, JR
Name:	HUGH B. BARWICK, JR
Title:	PRES
Date of Execution: July 16, 2019

PURCHASER:
Postal Realty LP
A Delaware limited Partnership
/s/ Andrew  Spodek
By:	Postal Realty Trust, Inc., its sole general partner
Name:	Andrew Spodek
Title:	Authorized Signatory
Date of Execution: July 16, 2019

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EX-10.4

Exhibit 10.4

EXECUTION VERSION

*Certain identified information has been excluded from this exhibit because it is
both (i) not material and (ii) would be competitively harmful if publicly disclosed.
The redacted confidential portions of the exhibit are marked by [***].

AGREEMENT OF PURCHASE AND SALE

BY AND BETWEEN

Postal Realty LP

and

HB BARWICK, INC.

Date: July 16, 2019

AGREEMENT OF PURCHASE AND SALE

This AGREEMENT OF PURCHASE AND SALE (this “Agreement”), is made and entered into this 16^th day of July, 2019 (the “Effective Date”), by and between HB Barwick, Inc., a North Carolina Corporation (“Seller”), and Postal Realty LP, a Delaware Limited Partnership (“Purchaser”).

ARTICLE I.

SALE AND PURCHASE OF THE PROPERTY

1.01 Agreement to Sell and Convey. Seller hereby agrees to sell and convey to Purchaser, and Purchaser hereby agrees to purchase from Seller, subject to the terms and conditions hereinafter set forth, (a) that certain real property being described on Exhibit “A” attached hereto and made a part hereof for all purposes, and all rights and appurtenances pertaining thereto including, without limitation, (i) all right, title and interest of Seller in and to adjacent streets, roads, alleys and rights-of-way, and any awards made or to be made in connection therewith, (ii) all rights of Seller in and to all easements appurtenant to or benefiting such parcels of land, (iii) all development rights, air rights, water rights and mineral rights and interests pertaining to such land, (iv) all strips and gores of land lying adjacent to such land (collectively, the “Land”), (b) all buildings, fixtures and improvements located on the Land (collectively, the “Improvements”), (c) all furniture, fixtures, equipment, machines, apparatus, supplies and personal property of every nature and description and all replacements thereof now owned by Seller and located in or on the Land and the Improvements, including, all of the right, tite and interest of Seller in and to any and all intangible personal property related to the Land and the Improvements, including, without limitation, all trade names and trademarks associated with the Land and the Improvements, (collectively, the “Personal Property”), but expressly excluding any personal property of USPS (hereinafter defined), and (d) the Land, the Improvements, the Personal Property, the Lease (as hereinafter defined), the Warranties (as hereinafter defined) and all such other rights, interests and properties are collectively called the “Property”.

1.02 Purchase Price. The purchase price (the “Purchase Price”) to be paid by Purchaser for the Property shall be FOUR MILLION FOUR HUNDRED FORTY-FOUR THOUSAND FIVE HUNDRED SIXTY - ONE AND 41/100 DOLLARS ($4,444,561.41). It is the intent of the parties that such transaction be treated as a sale unless otherwise permitted by applicable law. The Purchase Price shall be paid by delivery of immediately available funds to the Title Company (as hereinafter defined) at the Closing (as hereinafter defined).

1.03 Earnest Money Deposit. For the purpose of securing the performance of Purchaser under this Agreement, within seven (7) business days after the Effective Date, Purchaser shall deliver to First American Title Company Attn: ___________ (the “Title Company”), an earnest money deposit in the amount of Ten Thousand and No/100 Dollars ($10,000.00) (the “Escrow Deposit”). The Escrow Deposit shall be held and disbursed by the Title Company in accordance with the terms of this Agreement. At the Closing, the Escrow Deposit shall be combined with the balance of the Purchase Price and delivered to Seller by the Title Company.

1.04 Inspection Period.

a. Purchaser shall have a period of [***] days after Purchaser’s receipt of the documents described in Section 1.04(b) below (such period being called the “Inspection Period”) within which to make all inspections and investigations desired by Purchaser with respect to the Property. If, within the Inspection Period, Purchaser determines that it does not desire to purchase any or all Properties listed on Exhibit “A” for any reason, or for no reason, Purchaser shall have the right to terminate this Agreement, in whole or in part, by written notice delivered to Seller and the Title Company prior to 5:00 p.m., New York City time, on the final day of the Inspection Period and upon any such termination, the Escrow Deposit shall be immediately delivered to Purchaser and this Agreement shall be of no further force and effect. If Purchaser eliminates individual properties, the purchase price shall be decreased in accordance with the purchase price allocated on Exhibit “A”.

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b. Within three (3) days after the Effective Date, Seller shall, at its sole cost and expense, deliver or make available to Purchaser the following, to the extent in Seller’s possession:

(i) Copies of Seller’s owner title policy for the Property, existing survey of the Property, any and all engineering, structural, termite, property condition, soil or environmental reports relating to the Property and any plans and specifications or other architectural drawings for the Property which are in the possession or under the control of Seller;

(ii) Copies of all pleadings and other documents relating to any action, suit or proceeding involving Seller or the Property and which is currently pending;

(iii) A copy of each agreement between Seller and a third party pursuant to which such third party provides goods or services to or with respect to the Property and all amendments thereto (collectively, the “Service Contracts”);

(iv) A list of all contractors and vendors (with phone numbers) that have been servicing the Property the past three (3) years, and copies of any accepted proposals for work completed in the past three (3) years with confirmation the work was completed and paid for;

(v) Copies of all bonds, guarantees and warranties relating to the Property (collectively, the “Warranties”) currently existing or recently expired (within 5 years);

(vi) Copies of the real estate property tax and utility bills applicable to the Property for the past thirty-six (36) months;

(vii) Copies of all existing or recently expired extended coverage insurance policies, comprehensive general liability insurance policies, and any other insurance binders and paid invoices pertaining to the Property, including but not limited to a copy of the Insurance Loss Run Statement, or the ability for Seller’s insurance company to provide to Purchaser;

(viii) Copies of the fully executed lease and all amendments thereto (the “Lease”) with the United States Postal Service (“USPS” or sometimes referred to herein as the “Tenant”);

(ix) Copies of any correspondence to and from the USPS or their agents for the past 5 years;

(x) Copy of a 1099 from USPS for the current year;

(xi) Building plans or blueprints;

(xii) Copies of Seller’s formation and organizational documents; and

(xiii) Copies of the books and records maintained in connection with the ownership, management and operation of the Property, Seller’s signed tax return (or Schedule E), the income and expense statement, cash flow and other financial statements of Tenant, and the operating statements prepared by or on behalf of Seller with respect to the Property for the past 36 months, including rent, real estate taxes, real estate tax reimbursements, insurance claims, utilities, repairs and maintenance. Purchaser and its agents and representatives shall be entitled to enter upon the Property for inspection, studies, testing and examination prior to the Closing. Without limitation of the foregoing, Seller shall make available to Purchaser at the Property all files of Seller containing correspondence relating to the Lease, the Service Contracts, the Personal Property and any other matters relating to the Property.

c. From and after the Effective Date, Purchaser shall have the right to deliver a written notice to Seller directing Seller to terminate one (1) or more of the Service Contracts prior to the Closing (such notice being called the “Service Contract Termination Notice”). If Purchaser delivers the Service Contract Termination Notice to Seller, the Service Contracts described therein shall be terminated by Seller at or prior to the Closing and at Purchaser’s sole cost and expense.

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d. In addition to the materials to be provided by Seller pursuant to Section 1.04(b) above, from and after the Effective Date, Seller shall immediately deliver to Purchaser any and all new documentation that may come into Seller’s possession or knowledge from and after the Effective Date related to the Property, the Lease, the Service Contracts, and any other new leases or renewals of Lease or Service Contracts, including, without limitation, lease proposals, notice letters, letters of intent and any other writing related to the foregoing. During the pendency of this Agreement, Seller shall not execute any contracts, leases or any other agreements relating the Property or the Tenant without Purchaser’s consent, which consent shall not be unreasonably withheld, delayed or conditioned.

e. The Property shall be sold and conveyed on an “AS IS, WHERE IS” basis and in its present condition; however, only to the extent not handled by Tenant, Seller shall ensure that (1) all mechanical systems shall be in working order, including but not limited to, heating, air conditioning and electricity, (2) the Property shall be delivered free from leaks, and (3) the outside of the Property shall be maintained in its current condition.

ARTICLE II.

SURVEY AND TITLE COMMITMENT; PERMITTED EXCEPTIONS

2.01 Preliminary Title Report. Purchaser, at Purchaser’s sole cost and expense, shall cause the Title Company to issue and deliver to Purchaser a title commitment, update or abstract issued by the Title Company, accompanied by a legible copy of all recorded documents affecting the title to the Property and which would constitute encumbrances, restrictions, reservations or easements against the Property at the Closing (collectively, the “Title Commitment”). Within twenty (20) days after the Effective Date, Purchaser shall deliver written notice to Seller if the condition of title to the Property as set forth in Title Commitment [***] described in Section 2.02 below is not satisfactory to Purchaser (such notice being called the “Objection Notice”). Within seven (7) days of Seller’s receipt of the Objection Notice, Seller shall respond to Purchaser in writing (the “Seller’s Reply”) whether or not Seller will attempt to or can cure the unsatisfactory conditions to title. If Seller agrees to cure the unsatisfactory condition of title, such cure shall occur, if possible, prior to the Closing Date. However, if Seller is unwilling or unable to cure Purchaser’s objections as indicated in Seller’s Reply, then Purchaser, within seven (7) days of the receipt of Seller’s Reply, may elect to either (a) terminate this Agreement and receive a refund of the Escrow Deposit, or (b) proceed with the Closing without any reduction in the Purchase Price.

2.02 [***]

2.03 Environmental Report. At the completion of the Inspection Period, but prior to Closing, Purchaser shall order a preliminary Environmental Report or a Phase I Environmental Report at Purchaser’s sole discretion. If such report presents an environmental issue, Purchaser may cancel this Agreement at any time, including after the Inspection Period.

ARTICLE III.

CLOSING

3.01 Closing Date. The consummation of the transactions contemplated by this Agreement (the “Closing”) shall take place in the offices of the Title Company via mail within thirty (30) days after the expiration of the Inspection Period (such date being called the “Closing Date”), time being of the essence.

3.02 Seller’s Obligations at Closing. At the Closing, Seller shall do the following:

a. Execute, acknowledge, and deliver to Purchaser a Postal Service Form “Certificate of Transfer of Title to Leased Property and Lease Assignment and Assumption”, along with (i) originals of the Lease and any amendment, and (ii) a rent roll for the Property dated as of the Closing Date (only if there is more than one tenant) and made a part hereof for all purposes and certified by Seller to be true, correct and complete in all material respects.

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b. Execute, acknowledge, and deliver to Purchaser a special or limited warranty deed (or its local equivalent), as is customary for commercial transactions in the jurisdiction where the Land is located (the “Deed”) conveying the Land and the Improvements to Purchaser, subject only to the exceptions approved by Purchaser during its review of the Title Commitment (the “Permitted Exceptions”). The legal description of the Land conveyed by the Deed shall match the legal description of the Land shown on the Survey, the USPS lease and the tax plat map, and if same is not possible, then such differences must be reconciled prior to Closing Date, provided that any title warranties from Seller in the Deed shall be limited to the Property as described in the deeds conveying the Property to Seller.

c. Execute and deliver to the Title Company a certification of non-foreign status of Seller pursuant to Section 1445 of the Internal Revenue Code of 1986, as amended.

d. Execute and deliver an affidavit that there will be no unpaid bills or claims for labor performed or materials furnished, or contracted to be performed or furnished, upon the Property and to Seller’s actual knowledge that no environmental conditions exist.

e. Deliver such organizational and authority documents of Seller as the Title Company may reasonably require in connection with the Closing.

f. Execute and deliver such other documents as the Title Company may reasonably require in connection with the Closing including, without limitation, a closing statement, all transfer tax and conveyance documents and forms, and one (1) or more accurate affidavits regarding debts, liens and possession of the Property.

g. Cooperate in the furnishing and delivery by the Title Company to Purchaser, at the sole cost of Purchaser and at Purchaser’s discretion, an ALTA owner policy of title insurance issued by the Title Company insuring fee simple title to the Property in Purchaser in a face amount equal to the Purchase Price, and containing no exceptions other than the Permitted Exceptions and including such endorsements as may be specified by Purchaser at Purchaser’s sole expense (collectively, the “Policy”).

h. Deliver to Purchaser all keys or other access devices in the actual possession of Seller to all locks located in the Property.

i. Deliver to Purchaser originals, or, if any originals are not in Seller’s actual possession copies, certified as being true, correct and complete in all material respects, of the Lease, the Service Contracts, the Warranties, and all plans, governmental approvals, licenses, permits, and other contracts and agreements relating to the ownership and operation of the Property.

j. Deliver to Purchaser copies of the complete building file and all books and records pertaining to the operation of the Property in the actual possession of Seller.

3.03 Purchaser’s Obligations at Closing. Contemporaneously with the performance by Seller of its obligations set forth in Section 3.02 above, Purchaser shall do the following at the Closing:

a. Pay to Seller (or cause the Title Company to pay to Seller) the Purchase Price as provided in Section 1.02 above.

b. Deliver such organizational and authority documents of Purchaser as the Title Company may reasonably require in connection with the Closing. 

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c. Execute and deliver such other documents as the Title Company may reasonably require in connection with the Closing including, without limitation, a closing statement.

3.04 [***]

3.05 Conditions to Purchaser’s Obligations. Purchaser’s obligation to purchase the Property under this Agreement is subject to the satisfaction of each of the following conditions, any of which may be waived in whole or in part only in writing by Purchaser at or prior to the Closing Date:

a. Seller shall have delivered to the Title Company the items described in Section 3.02 above and shall otherwise have performed its obligations under Section 3.02 above.

b. There shall be no breach of any of Seller’s representations and warranties or covenants set forth in Article IV below as of the Closing Date.

c. Purchaser shall not have terminated this Agreement in accordance with Sections 1.04 or 2.01 hereof.

d. Intentionally deleted

e. Title to the Property shall be fee simple marketable title. In the event the title to the Property should prove to be unmarketable due to circumstances that occurred after the process set forth in Section 2.01 had elapsed, then Purchaser reserves the further right to object to, and Seller reserves the right to cure, the newly discovered unmarketable condition. If the unmarketable condition of title cannot be or is not cured by Seller, then Purchaser shall have a right to terminate the Agreement or to purchase the Property without a reduction in the Purchase Price.

f. Seller affirms that (i) the Lease is in full force and effect, (ii) there is no default by Tenant under the Lease nor has there been notice or demand for its cancellation, (iii) that USPS is occupying the Property and is paying rental due under the Lease, and (iv) there is no outstanding maintenance on the Property.

In the event any of such conditions are not satisfied or waived by Purchaser in writing, Purchaser shall have the right to terminate this Agreement by written notice to Seller and upon any such termination the Escrow Deposit shall be refunded to Purchaser.

3.06 Prorations. The following items shall be prorated between Seller and Purchaser (with Purchaser deemed to be holding title as of the Closing Date):

a. All ad valorem and other real estate taxes with respect to the Property (collectively, the “Taxes”) shall be prorated as of 12:01 a.m. on the Closing Date. If the Closing shall occur before the tax rate is fixed for the then current year, the apportionment of the Taxes shall be made upon the basis of the tax rate for the immediately preceding tax year applied to the latest assessed valuation of the Property. Within thirty (30) days after the actual amount of the Taxes for the year in which the Closing occurs are determined, Seller and Purchaser shall adjust the proration of the Taxes and Seller or Purchaser, as the case may be, shall pay to the other any amount required as a result of such adjustment. All unpaid taxes and taxes assessed against the Property for prior years due to a change in use or ownership of the Property shall be paid by Seller. Notwithstanding the foregoing, there will be no proration of taxes between the parties pursuant to this provision for which the payor is entitled to or has received a reimbursement from USPS.

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b. All rent and other amounts payable under the Lease shall be prorated as of 12:01 a.m. on the Closing Date. Seller shall be charged with and Purchaser shall receive a credit against the Purchase Price for (i) any rent and other amounts collected by Seller prior to the Closing Date, but applicable to any period after the Closing Date and (ii) any security deposits held by Seller and prepaid rents received by Seller under the Lease. Rent is deemed to be delinquent when payment thereof is due on or prior to Closing but has not been made by Closing. Delinquent rent shall be prorated between Purchaser and Seller as of the Closing as if Seller had received such rent and consequently, Seller shall not be entitled to any credit or increase to the Purchase Price as a result of such delinquent rent. Seller is permitted to pursue Tenant for delinquent rent that was due prior to Closing, but agrees to do so in a commercially reasonable manner (provided, however, that: (a) Seller shall not seek to have Tenant’s possession of the Land and the Improvements under the Lease terminated; and (b) Seller shall not be entitled to any rent received from Tenant after the Closing unless Tenant is current in its rent obligations to Purchaser for periods occurring from and after Closing). Delinquent rent collected by Purchaser (if any), net of the costs of collection (including attorneys’ fees), shall be applied first against those amounts currently due (or to be due within ten (10) days) and then to amounts most recently overdue. Any payments due to Seller as a result of collected delinquent rent shall be payable by Purchaser to Seller upon receipt thereof. In the event Seller receives the rental check from Tenant after the Closing, and it was not a part of the rent proration, Seller shall immediately remit to Purchaser the full amount of the check received. Both parties acknowledge that USPS rents are paid in arrears, at the end of month, and shall be adjusted accordingly.

c. All other income and operating expenses of the Property, including, without limitation, public utility charges, maintenance, management, and other service charges, and all other normal operating charges shall be prorated as of the Closing Date based upon the best available information (it being understood that, unless otherwise indicated, Seller shall pay all amounts due with respect to the Property that accrue prior to the Closing Date), or, in Purchaser’s sole discretion, moved into Purchaser’s name as of the Closing Date.

d. With respect to leasing commissions, tenant finish costs, costs associated with architectural plans and specifications, utility splits, and demising costs, if any, Seller shall be responsible for the payment of all such costs at the Closing.

e. For purposes of proration only, Purchaser is deemed to own the Property on the Closing Date.

f. This Section 3.06 shall not merge with the Deed and shall survive the Closing.

ARTICLE IV.

REPRESENTATIONS AND WARRANTIES AND COVENANTS

4.01 Representations and Warranties of Seller. Seller hereby represents and warrants to Purchaser, both as of the Effective Date as of the Closing Date, as follows:

a. Seller is a corporation duly formed, validly existing and in good standing under the laws of the State of North Carolina.

b. Seller has good, indefeasible and marketable fee simple title to the Land and the Improvements and good title to the Personal Property, free and clear of any liens or security interests.

c. Seller has all requisite power and authority, and has taken all actions required by its organizational documents and to authorize it to execute and deliver this Agreement and the closing documents. The individual(s) executing this Agreement and any other documents and instruments executed by Seller pursuant hereto has the legal power, right, and actual authority to bind Seller to the terms and conditions hereof and thereof. 

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d. The rent roll for the Property, delivered to Purchaser, is true, correct and complete in all material respects. The list of Service Contracts and Warranties, delivered to Purchaser, is true, correct and complete in all material respects.

e. To Seller’s actual knowledge, Seller is not in default of any of its obligations under the Lease and no event has occurred which with notice, the passing of time or both, would constitute a default or an event of default under the Lease.

f. To Seller’s actual knowledge, there are no leasing commissions, tenant finish costs, costs associated with architectural plans and specifications, utility splits, or demising costs payable by the landlord under the Lease from and after the Closing Date.

g. To Seller’s actual knowledge, Seller is not in default of any of its obligations under the Service Contracts and no event has occurred which with notice, the passing of time or both, would constitute a default or an event of default under any of the Service Contracts.

h. There is no action, claim, lawsuit, litigation or proceeding pending against or with respect to the Property or against Seller (which would materially adversely affect the Property, or which would materially impair or otherwise materially affect Seller’s ability to perform its obligations hereunder), and to the actual knowledge of Seller, no such action, claim, lawsuit, litigation or proceeding has been made or threatened.

i. Seller has not received notice of any pending or contemplated taking or condemnation of all or any portion of the Property.

j. To the actual knowledge of Seller, (i) the Property is not in violation of any law, code, ordinance, permit, license or restriction applicable to the Property, and (ii) hazardous wastes or hazardous substances are not currently present and have not been stored, handled, installed, released, discharged or disposed of in, on, under or about the Property.

k. Seller is not a “foreign person” as that term is defined in Section 1445 of the Internal Revenue Code of 1986, as amended, and any applicable regulations promulgated thereunder.

1. There do not exist any rights of first refusal or first offer or options to purchase the Property.

m. Seller has not made a general assignment for the benefit of creditors, filed any voluntary petition in bankruptcy or suffered the filing of an involuntary petition by its creditors, suffered the appointment of a receiver to take possession of substantially all of its assets, suffered the attachment or other judicial seizure of substantially all of its assets, admitted its inability to pay its debts as they come due, or made an offer of settlement, extension or composition to its creditors generally.

n. All bills for work done by Seller or materials furnished with respect to the Property by Seller have been paid in full or will be paid in full and discharged by the Closing Date.

o. Seller is not acting, directly or indirectly for, or on behalf of, any person, group, entity or nation named by any Executive Order (including the September 24, 2001, Executive Order Blocking Property and Prohibiting Transactions With Persons Who Commit, Threaten to Commit, or Support Terrorism) or the United States Treasury Department as a terrorist, “Specially Designated National and Blocked Person,” or other banned or blocked person, entity, or nation pursuant to any law that is enforced or administered by the Office of Foreign Assets Control, and is not engaging in this transaction, directly or indirectly, on behalf of, or instigating or facilitating this transaction, directly or indirectly, on behalf of, any such person, group, entity or nation.

p. Seller shall be responsible for maintenance enforced by the USPS prior to the Closing, even if the United States Postal Services enforces such maintenance obligations subsequent to the Closing;

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4.02 Representations and Warranties of Purchaser. Purchaser represents and warrants to Seller that Purchaser has all requisite power and authority, has taken all actions required by its organizational documents and applicable law, and has obtained all consents which are necessary to authorize or enable it to execute and deliver this Agreement.

4.03 Survival. The representations and warranties in this Article IV shall survive the Closing for a period of twenty-four (24) months in relation to Section 4.01(p) and twelve (12) months but no further, in relation to the remainder of this Article IV.

4.04 Covenants and Agreements of Seller. Seller covenants and agrees with Purchaser that from the Effective Date until the Closing Date:

a. From and after the Effective Date until the Closing Date, Seller shall continue the operation of the Property as presently operated and in accordance with prudent business practices, and maintain the Property in its present condition, ordinary wear and tear excepted. Should any equipment, fixtures or services fail between the Effective Date and the Closing Date for which Seller is responsible, Seller shall be responsible for the repair or replacement of such equipment, fixtures or services with a unit of similar size and quality, or at Purchaser’s option, Seller shall give Purchaser a settlement statement credit for the cost of such repair or replacement. From and after the Effective Date until the Closing Date, Seller shall not violate or allow the violation of any applicable laws. From and after the Effective Date hereof until the Closing Date, Seller shall do or cause to be done all things reasonably within its control to comply with any and all easements, grants, appurtenances, privileges and licenses encumbering the Property. Further, Seller agrees to pay, as and when due, all costs and expenses which have accrued prior to the Closing Date on any encumbrances presently affecting the Property.

b. Seller shall notify Purchaser of any litigation, arbitration, administrative hearing or condemnation proceeding before any court or governmental agency concerning or affecting the Property which is instituted or threatened after the Effective Date.

c. Seller shall not enter into any new -lease agreement covering all or any portion of the Property or amend or terminate the Lease without the prior written consent of Purchaser.

d. Seller shall promptly deliver to Purchaser copies of any written notice received from Tenant of its election to vacate any leased premises or terminate the Lease or claiming a default under the Lease.

e. Seller shall not remove any of the Personal Property from the Property, unless Seller shall replace the removed items with similar items of comparable quality and utility.

f. Seller will not enter into any agreement or contract with respect to the Property or amend any of the Service Contracts without the prior written consent of Purchaser.

g. Seller shall maintain the current or materially similar insurance coverage on the Property.

h. Seller shall perform all of its obligations under the Lease and the Service Contracts.

ARTICLE V.

CASUALTY AND CONDEMNATION

5.01 [***]

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5.02 [***]

ARTICLE VI.

PROVISIONS WITH RESPECT TO DEFAULT

6.01 Default by Seller. In the event Seller fails to perform any of its obligations under this Agreement at any time when Purchaser is not in default hereunder, Purchaser may, at its election and as its sole and exclusive remedy (except as provided in the following sentence), either (a) terminate this Agreement, receive full payment of the Escrow Deposit from the Title Company and recover from Seller its verifiable out-of-pocket expenses incurred in connection with Purchaser’s performance hereunder, or (b) enforce specific performance of this Agreement against Seller.

6.02 Default by Purchaser. In the event Purchaser fails to purchase the Property for any reason, except for a default by Seller as provided in Section 6.01 above or the termination by Purchaser of this Agreement pursuant to a right of termination expressly granted to Purchaser hereunder, Seller may, at its election and as its sole and exclusive remedy, terminate this Agreement and receive the Escrow Deposit from the Title Company as liquidated damages. The parties have agreed that Seller’s actual damages, in the event of Purchaser’s failure to close in breach hereof, would be extremely difficult or impracticable to determine. Therefore, the parties acknowledge that the Escrow Deposit has been agreed upon, after negotiation, as the parties’ reasonable estimate of Seller’s damages.

ARTICLE VII.

MISCELLANEOUS

7.01 Brokerage Fees and Commissions. Seller and Purchaser each represent and warrant to the other that they have not dealt with any real estate agent or broker in connection with the transaction evidenced by this Agreement. If any claims for brokerage commissions or fees are ever made against Seller or Purchaser in connection with this transaction, all such claims shall be handled and paid by the party whose commitments form the basis of such claims. Seller and Purchaser each agree to indemnify and hold harmless the other from and against any and all such claims or demands with respect to any brokerage fees or agents’ commissions or other compensation asserted by any person, firm, or corporation in connection with this Agreement or the transactions contemplated herein insofar as any such claim or demand is based upon a contract or commitment of the indemnifying party.

7.02 Audit. In the event that he Purchaser requires additional reasonable information from Seller, for accounting purposes, Seller shall reasonably accommodate Purchaser’s request.

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7.03 Notices. Any notice to be given or to be served upon any party hereto, in connection with this Agreement, must be in writing, and may be given by personal delivery, overnight mail, facsimile transmission or email. Notices given by personal delivery shall be deemed given on when received; overnight mail shall be deemed given on the next business day after mailing; and facsimile transmission or email shall be deemed given and received as of the time and date set forth on the electronic confirmed receipt of transmission of the sender. Such notices shall be given to the parties hereto at the following addresses:

Seller:	HB Barwick, Inc.
	Attn: Hugh B. Barwick, Jr.
	1911 Sunset Avenue
	Clinton, NC 28328
	Email: hbbarwick@embarqmail.com
With a copy to:	Manning, Fulton & Skinner, PA
	3605 Glenwood Avenue, Suite 500
	Raleigh, NC 27612
	Attn: Barry D. Mann, Esq.
	Email: mann@manningfulton.com
	Fax (919) 325-4616
Purchaser:	Postal Realty LP
	75 Columbia Avenue
	Cedarhurst, NY 11516
	Attn: Carrie Herz
	Fax: 646 506 3197
	Email: cherz@postalrealty.com
with a copy to:
	Attn:
	Fax:
	Email:

Any party hereto may, at any time by giving five (5) days’ written notice to the other party hereto, designate any other address in substitution of the foregoing address to which such notice shall be given.

7.04 Entire Agreement; Modification. This Agreement embodies and constitutes the entire understanding among the parties with respect to the transactions contemplated herein, and all prior or contemporaneous agreements, understandings, representations and statements, oral or written, are merged into this Agreement. Neither this Agreement nor any provision hereof may be waived, modified, amended, discharged or terminated except by an instrument in writing signed by the party against which the enforcement of such waiver, modification, amendment, discharge or termination is sought, and then only to the extent set forth in such instrument.

7.05 Headings. Descriptive headings are for convenience only and shall not control or affect the meaning or construction of any provision of this Agreement.

7.06 Binding Effect. This Agreement shall be binding upon and shall inure to the benefit of the parties hereto and their successors and assigns, provided that except as provided in Section 7.09 below, no assignment shall be made by either party without the prior written consent of the other party.

7.07 Days. If the final date of any period which is set out in any provision of this Agreement or the Closing Date falls on a Saturday, Sunday or legal holiday under the laws of the United States or the State of New York, then the time of such period or the Closing Date, as the case may be, shall be extended to the next date which is not a Saturday, Sunday or legal holiday.

7.08 Multiple Counterparts; Facsimile Signatures. This Agreement may be executed in a number of identical counterparts, each of which for all purposes is deemed an original, and all of which constitute collectively one agreement, but in making proof of this Agreement, it shall not be necessary to produce or account for more than one such counterpart. Signatures to this Agreement may be transmitted via facsimile and/or scanned and e-mailed and delivery thereby shall be deemed sufficient for all purposes to the same extent as would be delivery of an original signature.

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7.09 Assignment by Purchaser. Purchaser shall have the right to assign (without recourse) its rights under this Agreement to an affiliated entity designated by Purchaser to acquire the Property.

7.10 Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of New York without giving effect to the principles of conflicts of laws.

7.11 Attorneys’ Fees. Should either party hereto institute any action or proceeding in court to enforce this Agreement, the prevailing party in any such action or proceeding shall be entitled to receive from the non-prevailing party all reasonable attorneys’ fees and court costs in connection with such action or proceeding

7.12 Reporting Person. The Title Company is hereby designated as the “Reporting Person” pursuant to Section 6045 of the Internal Revenue Code and the Regulations promulgated thereunder.

7.13 Construction. The parties acknowledge and agree that the parties and their counsel have reviewed this Agreement and this Agreement shall not be presumptively interpreted against either party.

7.14 Severability. In the event any provision of this Agreement is held to be invalid, illegal, or unenforceable by a court of competent jurisdiction, the invalid, illegal or unenforceable provision shall not affect any other provisions, and this Agreement shall be construed as if the invalid, illegal, or unenforceable provision is severed and deleted from this Agreement.

7.15 Gender; Number. Unless the context requires otherwise, all pronouns used in this Agreement shall be construed to include the other genders, whether used in the masculine, feminine or neuter gender. Words in the singular number shall be construed to include the plural, and words in the plural shall be construed to include the singular.

7.16 1031 Exchange. It is understood that either Purchaser or Seller may choose to enact a 1031 Tax Exchange and agreed that both parties will cooperate at no cost or delay to either party.

7.17 Confidentiality: It is understood that the information in this contract must remain confidential. Seller shall not disclose information herein, unless necessary to facilitate the terms of the Contract.

7.18 Preparation of Financial Statements. At Purchaser’s request, at any time after the Closing, Seller shall provide Purchaser’s designated independent auditor access to the books and records of each Property that are necessary for compliance with Purchaser’s obligations under the federal securities laws, mandating preparation of financial statements in accordance with Rule 3-14 of Regulation S-X, as it may be amended or modified by the United States Securities and Exchange Commission from time to time, and Seller shall provide to such auditor a representation letter regarding the books and records of the Property, in a form each satisfactory to such auditor.

7.19 Expansion Work: Purchaser acknowledges that it is Purchaser’s responsibility to pay for expansion work on one of the Properties in the amount of $355,438.59 (“Contractor Fee”) contracted for by Seller prior to Closing Date, with a copy of the contract for such work being furnished along with the other documents under Section 1.04b attached hereto. Seller shall be responsible for any fee, related to work enumerated in attached contract, in excess of Contractor Fee. This Section 7.19 shall survive closing.

7.20 Duration of Offer: If this offer is not accepted by Seller on or before 5:00 pm EDT on July 19, 2019 and delivered to the undersigned it shall be deemed automatically revoked.

[Signatures on following page]

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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year that above written; provided, however, that for the purpose of determining “the date hereof,” as used in this Agreement, such date shall be the last date any of the parties hereto executes this Agreement.

SELLER:
HB Barwick, Inc.
A North Carolina Corporation
By:	/s/ Hugh B. Barwick, Jr.
Name:	Hugh B. Barwick, Jr.
Title:	President
Date of Execution: July 16, 2019
PURCHASER:
Postal Realty LP
A Delaware Limited Partnership
/s/ Andrew Spodek
By: Postal Realty Trust, Inc., its sole general partner
Name:	Andrew Spodek
Title:	Authorized Signatory
Date of Execution: July 16, 2019

EX-10.5

Exhibit 10.5

EXECUTION VERSION

*Certain identified information has been excluded from this exhibit because it is
both (i) not material and (ii) would be competitively harmful if publicly disclosed.
The redacted confidential portions of the exhibit are marked by [***].

AGREEMENT OF PURCHASE AND SALE

BY AND AMONG

POSTAL REALTY LP

and

HUGH B. BARWICK, JR.

Dated: July 16, 2019

AGREEMENT OF PURCHASE AND SALE

This AGREEMENT OF PURCHASE AND SALE (this “Agreement”), is made and entered into this 16^th day of July, 2019 (the “Effective Date”), by and among Hugh B. Barwick, Jr. (“Seller”), and Postal Realty LP, a Delaware limited partnership (“Purchaser”).

ARTICLE I.

SALE AND PURCHASE OF THE PROPERTY

1.01 Agreement to Sell and Convey. Seller hereby agrees to sell and convey to Purchaser, and Purchaser hereby agrees to purchase from Seller, subject to the terms and conditions hereinafter set forth, (a) all / 100% of the issued and outstanding equity interests (the “Contributed Interests”) in Hugh Barwick Rental, LLC, a North Carolina limited liability company (the “Contributed Entity”), that directly owns certain real property being described on Exhibit “A” attached hereto and made part hereof for all purposes, and being described on Exhibit “A”attached hereto and made a part hereof for all purposes, and all rights and appurtenances pertaining thereto including, without limitation, (i) all right, title and interest of the Contributed Entity in and to adjacent streets, roads, alleys and rights-of-way, and any awards made or to be made in connection therewith, (ii) all rights of the Contributed Entity in and to all easements appurtenant to or benefiting such parcels of land, (iii) all development rights, air rights, water rights and mineral rights and interests pertaining to such land, (iv) all strips and gores of land lying adjacent to such land (collectively, the “Land”), (b) all buildings, fixtures and improvements located on the Land (collectively, the “Improvements”), (c) all furniture, fixtures, equipment, machines, apparatus, supplies and personal property of every nature and description and all replacements thereof now owned by the Contributed Entity (but not including any property of USPS (as hereinafter defined) ..and located in or on the Land and the Improvements, including, without limitation, all of the personal property made a part hereof for all purposes, and all of the right, title and interest of the Contributed Entity in and to any and all intangible personal property related to the Land and the Improvements, including, without limitation, all trade names and trademarks associated with the Land and the Improvements, (collectively, the “Personal Property”), but expressly excluding any personal property of USPS (hereinafter defined), and (d) the Land, the Improvements, the Personal Property, the Lease (as hereinafter defined), the Warranties (as hereinafter defined) and all such other rights, interests and properties are collectively called the “Property”.

1.02 Purchase Price. The purchase price (the “Purchase Price”) to be paid by Purchaser for all of the Contributed Interests / the Property shall be FIVE MILLION SIX HUNDRED NINETY THOUSAND AND NO/100 DOLLARS ($5,690,000.00). It is the intent of the parties that such transaction be treated as a sale unless otherwise permitted by applicable law. The Purchase Price shall be paid by delivery of immediately available funds to the Title Company (as hereinafter defined) at the Closing (as hereinafter defined).

1.03 Earnest Money Deposit. For the purpose of securing the performance of Purchaser under this Agreement, within seven (7) business days after the Effective Date, Purchaser shall deliver to First American Title Company Attn: __________ (the “Title Company”), an earnest money deposit in the amount of TEN THOUSAND and No/100 Dollars ($10,000.00) (the “Escrow Deposit”). The Escrow Deposit shall be held and disbursed by the Title Company in accordance with the terms of this Agreement. At the Closing, the Escrow Deposit shall be combined with the balance of the Purchase Price and delivered to Seller by the Title Company.

1.04 Inspection Period.

a. Purchaser shall have a period of [***] days after Purchaser’s receipt of the documents described in Section 1.04(b) below (such period being called the “Inspection Period”) within which to make all inspections and investigations desired by Purchaser with respect to the Property. If, within the Inspection Period, Purchaser determines that it does not desire to purchase the Contributed Entity, or in the case of a Contributed Entity that directly or indirectly owns multiple properties, one or more of such properties, Purchaser shall have the right to terminate this Agreement by written notice delivered to Seller and the Title Company prior to 5:00 p.m., New York City time, on the final day of the Inspection Period and upon any such termination, the full Escrow Deposit shall be immediately delivered to Purchaser and this Agreement shall be of no further force and effect. In the event that Purchaser does not desire to purchase, in the case of a Contributed Entity that directly or indirectly owns multiple properties, one or more of such properties, the Purchase Price shall be adjusted downward based upon the price allocation of the properties reflected on Exhibit A, attached hereto.

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b. Within three (3) days after the Effective Date, Seller shall, at its sole cost and expense, deliver or make available to Purchaser the following:

(i) Copies of the Contributed Entity’s owner title policy for the Property, existing survey of the Property, any and all engineering, structural, termite, property condition, soil or environmental reports relating to the Property and any plans and specifications or other architectural drawings for the Property which are in the possession or under the control of Seller;

(ii) Copies of all pleadings and other documents relating to any action, suit or proceeding involving the Contributed Entity or the Property and which is currently pending;

(iii) A copy of each agreement between Seller or the Contributed Entity and a third party pursuant to which such third party provides goods or services to or with respect to the Contributed Entity or the Property and all amendments thereto (collectively, the “Service Contracts”);

(iv) A list of all contractors and vendors (with phone numbers) that have been servicing the Property the past three (3) years, and copies of any accepted proposals for work completed in the past three (3) years with confirmation the work was completed and paid for;

(v) Copies of all bonds, guarantees and warranties relating to the Contributed Entity or the Property (collectively, the “Warranties”) currently existing or recently expired (within 5 years);

(vi) Copies of the real estate property tax and utility bills applicable to the Property for the past thirty-six (36) months;

(vii) Copies of all existing or recently expired extended coverage insurance policies, comprehensive general liability insurance policies, and any other insurance binders and paid invoices pertaining to the Property, including but not limited to a copy of the Insurance Loss Run Statement, or the ability for the Contributed Entity’s insurance company to provide to Purchaser;

(viii) Copies of the fully executed lease and all amendments thereto (the “Lease”) with the United States Postal Service (“USPS”, or sometimes referred to herein as the “Tenant”);

(ix) Copies of any correspondence to and from the USPS or their agents for the past 5 years;

(x) Copy of a 1099 from USPS for the current year;

(xi) Building plans or blueprints in Seller’s possession;

(xii) Copies of the Contributed Entity’s (including any direct or indirect subsidiary of the Contributed Entity that owns the Property) formation and organizational documents; and

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(xiii) Copies of the books and records maintained in connection with the ownership, management and operation of the Contributed Entity or the Property, Seller’s and the Contributed Entity’s signed tax return (or Schedule E), the income and expense statement, cash flow and other financial statements of Tenant, and the operating statements prepared by or on behalf of Seller with respect to the Contributed Entity and the Property for the past 36 months, including rent, real estate taxes, real estate tax reimbursements, insurance claims, utilities, repairs and maintenance. Purchaser and its agents and representatives shall be entitled to enter upon the Property for inspection, studies, testing and examination prior to the Closing. Without limitation of the foregoing, Seller shall make available to Purchaser either at the Property or at the offices of Seller (to be designated by Seller) all files of Seller and the Contributed Entity containing correspondence relating to the Lease, the Service Contracts, the Personal Property and any other matters relating to the Contributed Entity or the Property.

c. From and after the Effective Date, Purchaser shall have the right to deliver a written notice to Seller directing Seller to terminate, or cause the Contributed Entity to terminate, one (1) or more of the Service Contracts prior to the Closing (such notice being called the “Service Contract Termination Notice”). If Purchaser delivers the Service Contract Termination Notice to Seller, the Service Contracts described therein shall be terminated by Seller at or prior to the Closing and at Purchaser’s sole cost and expense.

d. In addition to the materials to be provided by Seller pursuant to Section 1.04(b) above, from and after the Effective Date, Seller shall immediately deliver to Purchaser any and all new documentation that may come into Seller’s possession or knowledge from and after the Effective Date related to the Contributed Entity or the Property, the Lease, the Service Contracts, and any other new leases or renewals of Lease or Service Contracts, including, without limitation, lease proposals, notice letters, letters of intent and any other writing related to the foregoing. During the pendency of this Agreement, Seller shall not execute, and shall cause the Contributed Entity not to execute, any contracts, leases or any other agreements relating the Property or the Tenant without Purchaser’s prior written consent, which consent shall not be unreasonably withheld, delayed or conditioned.

e. The Property shall be sold and conveyed on an “AS IS, WHERE IS” basis and in its present condition; however, only to the extent not handled by Tenant, Seller shall ensure that (1) all mechanical systems shall be in working order, including but not limited to, heating, air conditioning and electricity, (2) the Property shall be delivered free from leaks, and (3) the outside of the Property shall be maintained in its current condition.

ARTICLE II.

SURVEY AND TITLE COMMITMENT; PERMITTED EXCEPTIONS

2.01 Preliminary Title Report. Purchaser, at Purchaser’s sole cost and expense, shall cause the Title Company to issue and deliver to Purchaser a title commitment, update or abstract issued by the Title Company, accompanied by a legible copy of all recorded documents affecting the title to the Property and which would constitute encumbrances, restrictions, reservations or easements against the Property at the Closing (collectively, the “Title Commitment”). Within twenty (20) days after the Effective Date, Purchaser shall deliver written notice to Seller if the condition of title to the Property as set forth in Title Commitment [***] described in Section 2.02 below is not satisfactory to Purchaser (such notice being called the “Objection Notice”). Within seven (7) days of Seller’s receipt of the Objection Notice, Seller shall respond to Purchaser in writing (the “Seller’s Reply”) whether or not Seller will attempt to or can cure the unsatisfactory conditions to title. If Seller agrees to cure the unsatisfactory condition of title, such cure shall occur, if possible, prior to the Closing Date. However, if Seller is unwilling or unable to cure Purchaser’s objections as indicated in Seller’s Reply, then Purchaser, within seven (7) days of the receipt of Seller’s Reply, may elect to either (a) terminate this Agreement and receive a refund of the Escrow Deposit, or (b) proceed with the Closing without any reduction in the Purchase Price.

2.02 [***]

2.03 Environmental Report. At the completion of the Inspection Period but prior to Closing, Purchaser shall order and receive a preliminary Environmental Report or a Phase I Environmental Report at Purchaser’s sole discretion. If such report presents an environmental issue, Purchaser may cancel this Agreement at any time, including after the Inspection Period.

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ARTICLE III.

CLOSING

3.01 Closing Date. The consummation of the transactions contemplated by this Agreement (the “Closing”) shall take place in the offices of the Title Company, via mail within thirty (30) days after the expiration of the Inspection Period (such date being called the “Closing Date”), time being of the essence.

3.02 Seller’s Obligations at Closing. At the Closing, Seller shall do the following:

a. Execute, acknowledge, and deliver to Purchaser an assignment and assumption of membership interest in a form mutually acceptable to Seller and Purchaser, and that Purchaser will execute and deliver to Seller.

b. [Intentionally deleted]

c. [Intentionally deleted]

d. Execute and deliver an affidavit that there will be no unpaid bills or claims for labor performed or materials furnished, or contracted to be performed or furnished, upon the Property.

e. Deliver such organizational and authority documents of the Contributed Entity as the Title Company may reasonably require in connection with the Closing.

f. Execute and deliver such other documents as the Title Company may reasonably require in connection with the Closing including, without limitation, a closing statement, all transfer tax and conveyance documents and forms, and one (1) or more accurate affidavits regarding debts, liens and possession of the Property.

g. [Intentionally deleted]

h. Deliver to Purchaser all keys or other access devices in the actual possession of Seller or the Contributed Entity to all locks located in the Property.

i. Deliver to Purchaser originals, or, if any originals are not in Seller’s actual possession, copies, certified as being true, correct and complete in all material respects, of the Lease, the Service Contracts, the Warranties, and all plans, governmental approvals, licenses, permits, and other contracts and agreements relating to the ownership and operation of the Contributed Entity and the Property.

j. Deliver to Purchaser copies of the complete building file and all books and records pertaining to the operation of the Contributed Entity and the Property in the actual possession of Seller or the Contributed Entity.

3.03 Purchaser’s Obligations at Closing. Contemporaneously with the performance by Seller of its obligations set forth in Section 3.02 above, Purchaser shall do the following at the Closing:

a. Pay to Seller (or cause the Title Company to pay to Seller) the Purchase Price as provided in Section 1.02 above.

b. Deliver such organizational and authority documents of Purchaser as the Title Company may reasonably require in connection with the Closing.

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c. Execute and deliver such other documents as the Title Company may reasonably require in connection with the Closing including, without limitation, a closing statement.

3.04 [***]

3.05 Conditions to Purchaser’s Obligations. Purchaser’s obligation to purchase the Contributed Entity under this Agreement is subject to the satisfaction of each of the following conditions, any of which may be waived in whole or in part only in writing by Purchaser at or prior to the Closing Date:

a. Seller shall have delivered to the Title Company the items described in Section 3.02 above and shall otherwise have performed its obligations under Section 3.02 above.

b. There shall be no breach of any of Seller’s representations and warranties or covenants set forth in Article IV below as of the Closing Date.

c. Purchaser shall not have terminated this Agreement pursuant to any provision herein.

d. [Intentionally deleted]

e. Seller affirms that (i) the Lease is in full force and effect, (ii) there is no default by Tenant under the Lease nor has there been notice or demand for its cancellation, (iii) that USPS is occupying the Property and is paying rental due under the Lease, and (iv) there is no outstanding maintenance on the Property.

In the event any of such conditions are not satisfied or waived by Purchaser in writing, Purchaser shall have the right to terminate this Agreement by written notice to Seller and upon any such termination, the full Escrow Deposit shall be refunded to Purchaser.

3.06 Prorations. The following items shall be prorated between Seller and Purchaser (with Purchaser deemed to be holding title as of the Closing Date):

a. All ad valorem and other real estate taxes with respect to the Property (collectively, the “Taxes”) shall be prorated as of 12:01 a.m. on the Closing Date. If the Closing shall occur before the tax rate is fixed for the then current year, the apportionment of the Taxes shall be made upon the basis of the tax rate for the immediately preceding tax year applied to the latest assessed valuation of the Property. Within thirty (30) days after the actual amount of the Taxes for the year in which the Closing occurs are determined, Seller and Pution of the Taxes and Seller or Purchaser, as the case may be, shall pay to the other any amount required as a result of sucrchaser shall adjust the prorah adjustment. All unpaid taxes and taxes assessed against the Property for prior years due to a change in use or ownership of the Property shall be paid by Seller. Notwithstanding the foregoing, there will be no proration of taxes among the parties pursuant to this provisions for which the payor is entitled to or has received a reimbursement from USPS.

b. All rent and other amounts payable under the Lease shall be prorated as of 12:01 a.m. on the Closing Date. Seller shall be charged with, and Purchaser shall receive, a credit against the Purchase Price for (i) any rent and other amounts collected by Seller or the Contributed Entity with respect to the Property prior to the Closing Date, but applicable to any period after the Closing Date and (ii) any security deposits held by Seller or the Contributed Entity with respect to the Property and prepaid rents received by Seller or the Contributed Entity with respect to the Property under the Lease. Rent is deemed to be delinquent when payment thereof is due on or prior to Closing but has not been made by Closing. Delinquent rent shall be prorated between Purchaser and Seller as of the Closing as if Seller or the Contributed Entity had received such rent and consequently, Seller shall not be entitled to any credit or increase to the Purchase Price as a result of such delinquent rent. Seller is permitted to pursue Tenant for delinquent rent that was due prior to Closing, but agrees to do so in a commercially reasonable manner (provided, however, that: (a) Seller shall not seek to have Tenant’s possession of the Land and the Improvements under the Lease terminated; and (b) Seller shall not be entitled to any rent received from Tenant after the Closing unless Tenant is current in its rent obligations to Purchaser for periods occurring from and after Closing). Delinquent rent collected by Purchaser (if any), net of the costs of collection (including attorneys’ fees), shall be applied first against those amounts currently due (or to be due within ten (10) days) and then to amounts most recently overdue. Any payments due to Seller as a result of collected delinquent rent shall be payable by Purchaser to Seller upon receipt thereof. In the event Seller receives the rental check from Tenant after the Closing, and it was not a part of the rent proration, Seller shall immediately remit to Purchaser the full amount of the check received. Both parties acknowledge that USPS rents are paid in arrears, at the end of month, and shall be adjusted accordingly.

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c. All other income and operating expenses of the Contributed Entity or the Property, including, without limitation, public utility charges, maintenance, management, and other service charges, and all other normal operating charges shall be prorated as of the Closing Date based upon the best available information (it being understood that, unless otherwise indicated, Seller, on behalf of the Contributed Entity, shall pay all amounts due with respect to the Property that accrue prior to the Closing Date), or, in Purchaser’s sole discretion, moved into Purchaser’s name as of the Closing Date.

d. With respect to leasing commissions, tenant finish costs, costs associated with architectural plans and specifications, utility splits, and demising costs, if any, Seller shall be responsible for the payment of all such costs at the Closing.

e. For purposes of proration only, Purchaser is deemed to own on the Property on the Closing Date.

f. This Section 3.06 shall not merge with the Deed and shall survive the Closing.

ARTICLE IV.

REPRESENTATIONS AND WARRANTIES AND COVENANTS

4.01 Representations and Warranties of Seller. Seller, severally and not jointly, hereby represents and warrants to Purchaser, both as of the Effective Date and as of the Closing Date, as follows:

a. The Contributed Entity is a limited liability company duly formed, validly existing and in good standing under the laws of the State of North Carolina.

b. Seller and the Contributed Entity, as applicable, has good, indefeasible and marketable fee simple title to the Contributed Interests and the Land and the Improvements and good title to the Personal Property, free and clear of any liens or security interests.

c. Seller has all requisite power and authority, and has taken all actions required by its organizational documents and to authorize it to execute and deliver this Agreement and the closing documents. The individual(s) executing this Agreement and any other documents and instruments executed by Seller pursuant hereto has the legal power, right, and actual authority to bind Seller to the terms and conditions hereof and thereof.

d. The rent roll for the Property, delivered to Purchaser, is true, correct and complete in all material respects. The list of Service Contracts and Warranties, delivered to Purchaser, is true, correct and complete in all material respects.

6

e. To Seller’s actual knowledge, the Contributed Entity is not in default of any of its obligations under the Lease and no event has occurred which with notice, the passing of time or both, would constitute a default or an event of default under the Lease.

f. To Seller’s actual knowledge, there are no leasing commissions, tenant finish costs, costs associated with architectural plans and specifications, utility splits, or demising costs payable by the landlord under the Lease from and after the Closing Date.

g. To Seller’s actual knowledge, the Contributed Entity is not in default of any of its obligations under the Service Contracts and no event has occurred which with notice, the passing of time or both, would constitute a default or an event of default under any of the Service Contracts.

h. There is no action, claim, lawsuit, litigation or proceeding pending against or with respect to the Contributed Entity and the Property or against Seller (which would materially adversely affect the Contributed Entity or the Property, or which would materially impair or otherwise materially affect Seller’s or the Contributed Entity’s ability to perform its obligations hereunder), and to the actual knowledge of Seller, no such action, claim, lawsuit, litigation or proceeding has been made or threatened.

i. Seller has not received notice of any pending or contemplated taking or condemnation of all or any portion of the Property.

j. To the actual knowledge of Seller, (i) neither the Contributed Entity nor the Property is in violation of any law, code, ordinance, permit, license or restriction applicable to the Contributed Entity or the Property, and (ii) hazardous wastes or hazardous substances are not currently present and have not been stored, handled, installed, released, discharged or disposed of in, on, under or about the Property.

k. Seller is not a “foreign person” as that term is defined in Section 1445 of the Internal Revenue Code of 1986, as amended, and any applicable regulations promulgated thereunder.

l. There do not exist any rights of first refusal or first offer or options to purchase the Property or the Contributed Interests.

m. Neither Seller nor the Contributed Entity has made a general assignment for the benefit of creditors, filed any voluntary petition in bankruptcy or suffered the filing of an involuntary petition by its creditors, suffered the appointment of a receiver to take possession of substantially all of its assets, suffered the attachment or other judicial seizure of substantially all of its assets, admitted its inability to pay its debts as they come due, or made an offer of settlement, extension or composition to its creditors generally.

n. All bills for work done by Seller or materials furnished to the Contributed Entity with respect to the Property by Seller have been paid in full or will be paid in full and discharged by the Closing Date.

o. Seller is not acting, directly or indirectly for, or on behalf of, any person, group, entity or nation named by any Executive Order (including the September 24, 2001, Executive Order Blocking Property and Prohibiting Transactions With Persons Who Commit, Threaten to Commit, or Support Terrorism) or the United States Treasury Department as a terrorist, “Specially Designated National and Blocked Person,” or other banned or blocked person, entity, or nation pursuant to any law that is enforced or administered by the Office of Foreign Assets Control, and is not engaging in this transaction, directly or indirectly, on behalf of, or instigating or facilitating this transaction, directly or indirectly, on behalf of, any such person, group, entity or nation.

p. Seller shall be responsible for maintenance enforced by the USPS prior to the Closing, even if the United States Postal Services enforces such maintenance obligations of Seller subsequent to the Closing;

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4.02 Representations and Warranties of Purchaser. Purchaser represents and warrants to Seller that Purchaser has all requisite power and authority, has taken all actions required by its organizational documents and applicable law, and has obtained all consents which are necessary to authorize or enable it to execute and deliver this Agreement.

4.03 Survival. The representations and warranties in this Article IV shall survive the Closing for a period of twenty-four (24) months in relation to Section 4.01(p) and twelve (12) months, but no further, in relation to the remainder of this Article IV.

4.04 Covenants and Agreements of Seller. Seller covenants and agrees with Purchaser that from the Effective Date until the Closing Date:

a. From and after the Effective Date until the Closing Date, Seller shall continue the operation of the Contributed Entity and the Property as presently operated and in accordance with prudent business practices, and maintain the Property in its present condition, ordinary wear and tear excepted. Should any equipment, fixtures or services fail between the Effective Date and the Closing Date for which Seller is responsible, Seller shall be responsible for the repair or replacement of such equipment, fixtures or services with a unit of similar size and quality, or at Purchaser’s option, Seller shall give Purchaser a settlement statement credit for the cost of such repair or replacement. From and after the Effective Date until the Closing Date, Seller shall not knowingly violate or allow the violation of any applicable laws with respect to the Property and the Contributed Entity. From and after the Effective Date until the Closing Date, Seller shall do or cause to be done all things reasonably within its control to comply with any and all easements, grants, appurtenances, privileges and licenses encumbering the Property. Further, Seller agrees to pay, as and when due, whether on its own behalf or on behalf of the Contributed Entity, all costs and expenses which have accrued prior to the Closing Date on any encumbrances presently affecting the Property.

b. Seller shall notify Purchaser of any litigation, arbitration, administrative hearing or condemnation proceeding before any court or governmental agency concerning or affecting the Contributed Entity or the Property which is instituted or threatened after the Effective Date.

c. Seller shall not enter into any new lease agreement covering all or any portion of the Property or amend or terminate the Lease without the prior written consent of Purchaser.

d. Seller shall promptly deliver to Purchaser copies of any written notice received from Tenant of its election to vacate any leased premises or terminate the Lease or claiming a default under the Lease.

e. Seller shall not remove any of the Personal Property from the Property, unless Seller shall replace the removed items with similar items of comparable quality and utility.

f. Seller will not enter into any agreement or contract with respect to the Contributed Entity or the Property or amend any of the Service Contracts without the prior written consent of Purchaser.

g. Seller shall maintain the current or materially similar insurance coverage on the Contributed Entity and the Property.

h. Seller shall perform all of its obligations under the Lease and the Service Contracts.

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ARTICLE V.

CASUALTY AND CONDEMNATION

5.01 [***]

5.02 [***]

ARTICLE VI.

PROVISIONS WITH RESPECT TO DEFAULT

6.01 Default by Seller. In the event Seller fails to perform any of its obligations under this Agreement at any time when Purchaser is not in default hereunder, Purchaser may, at its election and as its sole and exclusive remedy (except as provided in the following sentence), either (a) terminate this Agreement, receive full payment of the Escrow Deposit from the Title Company and recover from Seller its verifiable out-of-pocket expenses incurred in connection with Purchaser’s performance hereunder, or (b) enforce specific performance of this Agreement against Seller.

6.02 Default by Purchaser. In the event Purchaser fails to purchase the Property for any reason, except for a default by Seller as provided in Section 6.01 above or the termination by Purchaser of this Agreement pursuant to a right of termination expressly granted to Purchaser hereunder, Seller may, at its election and as its sole and exclusive remedy, terminate this Agreement and receive the full Escrow Deposit from the Title Company as liquidated damages. The parties have agreed that Seller’s actual damages, in the event of Purchaser’s failure to close in breach hereof, would be extremely difficult or impracticable to determine. Therefore, the parties expressly acknowledge that the Escrow Deposit has been agreed upon, after negotiation, as the parties’ reasonable estimate of Seller’s damages.

ARTICLE VII.

MISCELLANEOUS

7.01 Brokerage Fees and Commissions. Seller and Purchaser each represent and warrant to the other that they have not dealt with any real estate agent or broker in connection with the transaction evidenced by this Agreement. If any claims for brokerage commissions or fees are ever made against Seller or Purchaser in connection with this transaction, all such claims shall be handled and paid by the party whose commitments form the basis of such claims. Seller and Purchaser each agree to indemnify and hold harmless the other from and against any and all such claims or demands with respect to any brokerage fees or agents’ commissions or other compensation asserted by any person, firm, or corporation in connection with this Agreement or the transactions contemplated herein insofar as any such claim or demand is based upon a contract or commitment of the indemnifying party.

7.02 Audit. In the event that Purchaser requires additional reasonable information from Seller, for accounting or tax purposes, Seller shall reasonably accommodate Purchaser’s request.

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7.03 Notices. Any notice to be given or to be served upon any party hereto, in connection with this Agreement, must be in writing, and may be given by personal delivery, overnight mail, facsimile transmission or email. Notices given by personal delivery shall be deemed given on when received; overnight mail shall be deemed given on the next business day after mailing; and facsimile, transmission or email shall be deemed given and received as of the time and date set forth on the electronic confirmed receipt of transmission of the sender. Such notices shall be given to the parties hereto at the following addresses:

Seller:	Hugh B. Barwick, Jr. 1911 Sunset Avenue Clinton, NC 28328 Email: hbbarwick@embarqmail.com
with a copy to:	Manning, Fulton & Skinner, P.A. 3605 Glenwood Avenue, Suite 500 Raleigh, NC 27612 Attn: Barry D. Mann Fax: (919) 325-4616 Email: mann@manningfulton.com
Purchaser:	Postal Realty LP 75 Columbia Avenue Cedarhurst, NY 11516 Attn: Carrie Herz, Esq. Fax: (646) 506-3197 Email: cherz@postalrealty.com
with a copy to:	Attn:                                                    Email:

Any party hereto may, at any time by giving five (5) days’ written notice to the other party hereto, designate any other address in substitution of the foregoing address to which such notice shall be given.

7.04 Entire Agreement; Modification. This Agreement embodies and constitutes the entire understanding among the parties with respect to the transactions contemplated herein, and all prior or contemporaneous agreements, understandings, representations and statements, oral or written, are merged into this Agreement. Neither this Agreement nor any provision hereof may be waived, modified, amended, discharged or terminated except by an instrument in writing signed by the party against which the enforcement of such waiver, modification, amendment, discharge or termination is sought, and then only to the extent set forth in such instrument.

7.05 Headings. Descriptive headings are for convenience only and shall not control or affect the meaning or construction of any provision of this Agreement.

7.06 Binding Effect. This Agreement shall be binding upon and shall inure to the benefit of the parties hereto and their successors and assigns, provided that except as provided in Section 7.09 below, no assignment shall be made by either party without the prior written consent of the other party.

7.07 Days. If the final date of any period which is set out in any provision of this Agreement or the Closing Date falls on a Saturday, Sunday or legal holiday under the laws of the United States or the State of New York, then the time of such period or the Closing Date, as the case may be, shall be extended to the next calendar day which is not a Saturday, Sunday or legal holiday.

7.08 Multiple Counterparts; Facsimile Signatures. This Agreement may be executed in a number of identical counterparts, each of which for all purposes is deemed an original, and all of which constitute collectively one agreement, but in making proof of this Agreement, it shall not be necessary to produce or account for more than one such counterpart. Signatures to this Agreement may be transmitted via facsimile and/or scanned and e-mailed and delivery thereby shall be deemed sufficient for all purposes to the same extent as would be delivery of an original signature.

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7.09 Assignment by Purchaser. Notwithstanding Section 7.06 above, Purchaser shall have the right to assign (without recourse) its rights under this Agreement to an affiliated entity designated by Purchaser to acquire the Property.

7.10 Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of New York, without giving effect to the principles of conflicts of laws.

7.11 Attorneys’ Fees. Should either party hereto institute any action or proceeding in court to enforce this Agreement, the prevailing party in any such action or proceeding shall be entitled to receive from the non-prevailing party all reasonable attorneys’ fees and court costs in connection with such action or proceeding

7.12 Reporting Person. The Title Company is hereby designated as the “Reporting Person” pursuant to Section 6045 of the Internal Revenue Code and the Regulations promulgated thereunder.

7.13 Construction. The parties acknowledge and agree that the parties and their counsel have reviewed this Agreement and this Agreement shall not be presumptively interpreted against either party.

7.14 Severability. In the event any provision of this Agreement is held to be invalid, illegal, or unenforceable by a court of competent jurisdiction, the invalid, illegal or unenforceable provision shall not affect any other provisions, and this Agreement shall be construed as if the invalid, illegal, or unenforceable provision is severed and deleted from this Agreement.

7.15 Gender: Number. Unless the context requires otherwise, all pronouns used in this Agreement shall be construed to include the other genders, whether used in the masculine, feminine or neuter gender. Words in the singular number shall be construed to include the plural, and words in the plural shall be construed to include the singular.

7.16 1031 Exchange. It is understood that either Purchaser or Seller may choose to enact a 1031 Tax Exchange and agreed that both parties will cooperate at no cost or delay to either party.

7.17 Confidentiality: It is understood that the information in this contract must remain confidential. Seller shall not disclose information herein, unless necessary to facilitate the terms of the Contract.

7.18 Preparation of Financial Statements. At Purchaser’s request, at any time prior to or after the Closing, Seller shall provide Purchaser’s designated independent auditor access to the books and records of each Property that are necessary for compliance with Purchaser’s obligations under the federal securities laws, mandating preparation of financial statements in accordance with Rule 3-14 of Regulation S-X, as it may be amended or modified by the United States Securities and Exchange Commission from time to time, and Seller shall provide to such auditor a representation letter regarding the books and records of the Property, in a form each satisfactory to such auditor.

7.19 Duration of Offer: If this offer is not accepted by Seller on or before 5:00 pm EDT on July 19, 2019 and delivered to the undersigned, it shall be deemed automatically revoked.

(Signatures on following page)

11

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and your first above written; provided, however, that for the purpose of determining “the date hereof,” as used in this Agreement, such date shall be the last date any of the parties hereto executes this Agreement.

SELLER:
By:	/s/ Hugh B. Barwick, Jr.
Name:	Hugh B. Barwick, Jr.
Title:	Member, Hugh Barwick Rental, LLC
Date of Execution: July 16, 2019
PURCHASER:
/s/ Andrew Spodek
a(n) Postal Realty LP a delaware limited partnership
By:	Postal Realty Trust, Inc., sole general partner
Name:	Andrew Spodek
Title:	Authorized Signatory
Date of Execution: July 16, 2019

12

EX-31.1

Exhibit 31.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER

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

AS ADOPTED PURSUANT TO

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Andrew Spodek, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Postal Realty Trust, Inc. (the “registrant”) for the quarterly period ended September 30, 2019;

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

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

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

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

(b) Intentionally omitted;

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

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

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

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

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

Date: November 12, 2019	/s/ Andrew Spodek
	Andrew Spodek, Chief Executive Officer (Principal Executive Officer) Postal Realty Trust, Inc.

EX-31.2

Exhibit 31.2

CERTIFICATION OF CHIEF EXECUTIVE OFFICER

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

AS ADOPTED PURSUANT TO

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Jeremy Garber, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Postal Realty Trust, Inc. (the “registrant”) for the quarterly period ended September 30, 2019;

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

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

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

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

(b) Intentionally omitted;

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

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

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

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

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

Date: November 12, 2019	/s/ Jeremy Garber
	Jeremy Garber, President, Treasurer and Secretary (Principal Financial Officer) Postal Realty Trust, Inc.

EX-32.1

Exhibit 32.1

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

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

Certificate of Principal Executive Officer

In connection with the Quarterly Report on Form 10-Q of Postal Realty Trust, Inc. (the “Company”) on Form 10-Q for the quarterly period ended September 30, 2019 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Andrew Spodek, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:

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

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

	Postal Realty Trust, Inc.
Date: November 12, 2019	By:	/s/ Andrew Spodek
		Andrew Spodek Chief Executive Officer and Director (Principal Executive Officer)

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

EX-32.2

Exhibit 32.2

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

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

Certificate of Principal Financial Officer

In connection with the Quarterly Report on Form 10-Q of Postal Realty Trust, Inc. (the “Company”) on Form 10-Q for the quarterly period ended September 30, 2019 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Jeremy Garber, President, Treasurer and Secretary of the Company, certify, pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:

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

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

	Postal Realty Trust, Inc.
Date: November 12, 2019	By:	/s/ Jeremy Garber
		Jeremy Garber President, Treasurer and Secretary (Principal Financial Officer)

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

XML

RELATED PARTY TRANSACTIONS (Details)	Sep. 30, 2019 USD ($)
Related Party Transactions [Abstract]
2019 - Remaining	$ 45,000
2020	183,368
2021	188,869
2022	194,535
2023	200,371
Thereafter	76,244
Total	$ 888,387

XML

SUBSEQUENT EVENTS (Details Narrative) - Subsequent Event [Member] - USD ($)	1 Months Ended
	Nov. 30, 2019	Oct. 31, 2019	Oct. 30, 2019
Subsequent Events (Textual)
Acquisition of properties, description	In November 2019, the Company, through its Operating Partnership, acquired 22 properties leased to the USPS located in various states for approximately $7.8 million.	The Company, through its Operating Partnership, acquired 55 properties leased to the USPS located in various states for approximately $9.5 million.
Definitive purchase agreement, description	The Company entered into definitive agreements to acquire 98 properties leased to the USPS for approximately $27.6 million, which includes $14.0 million in OP Units priced at $17.00/share. Formal due diligence has been completed and the transactions are expected to close by the end of the year, subject to the satisfaction of customary closing conditions.
Borrowed an additional			$ 20,000,000

XML

Consolidated and Combined Consolidated Balance Sheets (Unaudited) (Parenthetical) - USD ($)	Sep. 30, 2019	Dec. 31, 2018
In-place lease intangibles of accumulated amortization	$ 5,628,459
Above market leases of accumulated amortization	16,539
Below market leases of accumulated amortization	$ 1,860,167
Class A [Member]
Common stock, par value	$ 0.01
Common stock, shares authorized	500,000,000
Common stock, shares issued	5,285,904
Common stock, shares outstanding	5,285,904
Class B [Member]
Common stock, par value	$ 0.01
Common stock, shares authorized	27,206
Common stock, shares issued	27,206
Common stock, shares outstanding	27,206
Predecessor [Member]
In-place lease intangibles of accumulated amortization		$ 4,388,699
Above market leases of accumulated amortization		8,688
Below market leases of accumulated amortization		$ 1,525,540
Predecessor [Member] | NPM
Common stock, par value
Common stock, shares authorized		200
Common stock, shares issued		200
Common stock, shares outstanding		200
Predecessor [Member] | UPH
Common stock, par value
Common stock, shares authorized		1,000
Common stock, shares issued		1,000
Common stock, shares outstanding		1,000

XML

RELATED PARTY TRANSACTIONS (Tables)

9 Months Ended

Sep. 30, 2019

Related Party Transactions [Abstract]

Schedule of future minimum rental payments

As of September 30, 2019, future minimum rental payments on the noncancelable lease is as follows:

Year Ending December 31,	Amount
2019 – Remaining	$	45,000
2020		183,368
2021		188,869
2022		194,535
2023		200,371
Thereafter		76,244
Total	$	888,387

XML

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) - Nationwide Postal and Affiliates Predecessor

9 Months Ended

Sep. 30, 2019

Schedule of identifiable tangible and intangible assets and liabilities

The total purchase price was allocated as follows:

	Three months ended
	September 30, 2019			June 30, 2019			March 31, 2019
Land	$	2,619,719		$	6,789,589		$	179,202
Building and improvements		8,301,678			18,774,918			456,550
Tenant improvements		190,343			259,640			18,166
In-place lease intangibles		982,974			2,227,870			69,504
Above-market leases		-			6,338			-
Below market leases		(1,024,644	)		(754,300	)		(78,302	)
Total	$	11,070,070		$	27,304,055		$	645,120

During the nine months ended September 30, 2018, the Predecessor acquired seven properties for an aggregate purchase price of $1,334,591, inclusive of acquisition costs of $19,598. The purchase price was 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 was allocated as follows:

	Nine months ended
	September 30, 2018
Land	$	502,667
Building and improvements		825,811
Tenant improvements		29,029
In-place lease intangibles		171,713
Above-market leases		19,602
Below market leases		(214,231	)
Total	$	1,334,591

Schedule of Cash and restricted cash

Cash and cash equivalents include cash and highly liquid investment securities with maturities at acquisition of three months or less. Restricted cash is presented as escrows and reserves in the accompanying consolidated and combined consolidated balance sheets. Cash and restricted cash consist of the following:

	September 30, 2019 (Unaudited)		December 31, 2018
Cash	$	10,969,557	$	262,926
Restricted cash:
Maintenance reserve		602,306		598,949
ESPP reserve		7,894		-
Total cash and restricted cash	$	11,579,757	$	861,875

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ORGANIZATION AND DESCRIPTION OF BUSINESS

9 Months Ended

Sep. 30, 2019

Organization and Description of Business [Abstract]

ORGANIZATION AND DESCRIPTION OF BUSINESS

1. ORGANIZATION AND DESCRIPTION OF BUSINESS

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

The Company’s interest in the Operating Partnership entitles the Company to share in distributions from, and allocations of profits and losses of, the Operating Partnership in proportion to the Company’s percentage ownership of common 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 September 30, 2019, the Company held a 78.5% 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, or VIE, in which we are the primary beneficiary.

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

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

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

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

As of September 30, 2019, the Company owns and manages a portfolio of 289 postal properties located in 43 states. All of the properties were leased to a single tenant, the United States Postal Service (the “USPS”) other than a de-minimis non-postal tenant that shares space in a building leased to the USPS.

In addition, through its taxable REIT subsidiary (“TRS”), Postal Realty Management TRS, LLC (“PRM”), the Company provides fee-based third party property management services for an additional 403 postal properties, which are owned by Mr. Spodek and his family members and their partners.

The Company is a Maryland corporation formed on November 19, 2018 and until May 15, 2019, was authorized to issue up to 600,000,000 shares of common stock, par value $0.01 per share. On May 15, 2019, in connection with the IPO, we amended our articles of incorporation such that the Company is currently authorized to issue up to 500,000,000 shares of Class A Common Stock, 27,206 shares of Class B common stock, $0.01 par value per share (our “Class B Common Stock”), and up to 100,000,000 shares of preferred stock. The Company elected to be taxed as an S-Corporation under the Internal Revenue Code of 1986, as amended (the “Code”), effective November 19, 2018, and as such, all federal tax liabilities were the responsibility of the Company’s sole stockholder until the completion of our IPO. In anticipation of the IPO, the Company revoked its S-Corporation election on May 14, 2019. The Company intends to qualify and elect to qualify as a real estate investment trust (“REIT”) under the Code beginning with its short taxable year ending December 31, 2019. As a REIT, the Company generally will not be subject to federal income tax to the extent that it distributes at least 90% of its taxable income for each tax year to its stockholders. REITs are subject to a number of organizational and operational requirements.

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INCOME TAXES

9 Months Ended

Sep. 30, 2019

Income Tax Disclosure [Abstract]

INCOME TAXES

8. INCOME TAXES

For the three and nine months ended September 30, 2018, in order to determine the quarterly provision for income taxes for UPH, the Company used an estimated annual effective tax rate (“ETR”), which is based on expected annual income and statutory tax rates in the various jurisdictions. Certain significant or unusual items are separately recognized as discrete items in the quarter during which they occur and can be a source of variability in the effective tax rates from quarter to quarter.

Income tax expense (benefit) related to UPH for the three and nine months ended September 30, 2019 was zero and $39,749 at an effective tax rate of 13.4% and $(143,382) and $(83,742) at an effective tax rate of 6.4% for the three and nine months ended September 30, 2018. The effective tax rate for the three and nine months ended September 30, 2019 and September 30, 2018 differs from the statutory rate of 21% due to certain entities included in the consolidated and combined consolidated financial statements that are not subject to tax at the entity level, state taxes and interest and penalties from unrecognized tax benefits primarily related to the utilization of loss carryforwards. 

In connection with the IPO, the indirect sole shareholder of UPH agreed to reimburse the Company for unrecognized tax benefits primarily related to the utilization of certain loss carryforwards at UPH. The Company recorded an indemnification asset in the same amount as the unrecognized tax benefits. The amount will be adjusted going forward as new information becomes available in regard to such liability. The indirect sole shareholder of UPH will be responsible for all tax related matters related to UPH. The Company has unrecognized tax benefits at September 30, 2019 of $516,529, which is inclusive of interest and penalties and a corresponding indemnification asset which is recorded in prepaid expenses and other assets on the consolidated balance sheet. During the three months ended September 30, 2019, the Company reversed $191,391 of unrecognized tax benefits and the corresponding indemnification asset due to the expiration of statute of limitations.

In connection with the IPO, the UPH $727,952 deferred tax liability at May 16, 2019 was reversed through equity. Deferred taxes have not been recorded with respect to the Company’s acquired basis differences of UPH due to the Company’s election to be taxed as a REIT in addition to the insignificant state effective tax rate for states that do not conform to federal taxation of REITs.

In connection with the IPO, the Company elected to treat PRM as a TRS which performs management services for properties the Company does not own. PRM generates income, resulting in Federal and state income tax liability for these entities.

For the three and nine months ended September 30, 2019, income tax benefit related to PRM was $6,259 and zero, respectively.

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INTANGIBLE ASSETS AND LIABILITIES

9 Months Ended

Sep. 30, 2019

Intangible Assets and Liabilities [Abstract]

INTANGIBLE ASSETS AND LIABILITIES

4.INTANGIBLE ASSETS AND LIABILITIES

Amortizationof in-place lease intangibles was $1.2 million and $0.6 million for the nine months ended September 30, 2019 and 2018, respectively.This amortization is included in depreciation and amortization in the consolidated and combined consolidated statements of operations.Amortization of acquired above market leases was $7,851 and $6,319 for the nine months ended September 30, 2019 and 2018, respectively,and is included in rent income in the consolidated and combined consolidated statements of operations. Amortization of acquiredbelow market leases was $334,627 and $215,955 for the nine months ended September 30, 2019 and 2018, respectively, and is includedin rent income in the consolidated and combined consolidated statements of operations.

Thebalance of these intangible assets and liabilities will be amortized as follows:

Year ending December 31,	In-Place Lease Intangibles		Below Market Leases		Above Market Leases
2019 – Remaining	$	567,742	$	167,579	$	1,372
2020		1,850,310		622,436		4,903
2021		1,304,600		555,645		1,975
2022		516,851		503,120		1,151
2023		265,875		455,109		-
Thereafter		271,137		3,061,229		-
Total	$	4,776,515	$	5,365,118	$	9,401

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COMMITMENTS AND CONTINGENCIES

9 Months Ended

Sep. 30, 2019

Commitments and Contingencies [Abstract]

COMMITMENTS AND CONTINGENCIES

12. COMMITMENTS AND CONTINGENCIES

At September 30, 2019, the Company was not involved in any litigation nor to its knowledge is any litigation threatened against the Predecessor or the Company, as applicable, that, in management’s opinion, would result in any material adverse effect on the Company’s financial position, or which is not covered by insurance.

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

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details Narrative)	3 Months Ended		9 Months Ended
	Sep. 30, 2019 USD ($) properties $ / shares shares	Mar. 31, 2019 USD ($) properties	Sep. 30, 2019 USD ($) properties $ / shares shares	Sep. 30, 2018 USD ($)	Dec. 31, 2018 USD ($)
Summary of Significant Accounting Policies (Textual)
Offering and other costs			$ 500,000
Depreciation on buildings straight-line basis over			40 years
Mortgage loans payable	$ 3,208,680		$ 3,208,680
Issue of common units of limited partnership | shares	1,333,112		1,333,112
Long term incentive units | shares	114,706		114,706
Cash dividend declared per share | $ / shares	$ 0.063		$ 0.063
Dividends	$ 700,000		$ 700,000
Potentially dilutive shares outstanding | shares			1,453,116
Aggregated mortgages loans payable	$ 3,272,911		$ 3,272,911
Number of properties | properties	7		7
IPO [Member]
Summary of Significant Accounting Policies (Textual)
Purchase price of property acquired	$ 11,100,000		$ 27,300,000
Acquisition costs	$ 100,000		$ 400,000
Long term incentive units | shares	5,298		5,298
Number of properties | properties	18		18
Common Unitholders [Member]
Summary of Significant Accounting Policies (Textual)
Dividends	$ 100,000		$ 100,000
Dividend cash per shares | $ / shares	$ 0.14		$ 0.14
Majority Shareholder [Member]
Summary of Significant Accounting Policies (Textual)
Dividends	$ 300,000		$ 300,000
Predecessor [Member]
Summary of Significant Accounting Policies (Textual)
Mortgage loans payable					$ 33,586,000
Aggregated mortgages loans payable					$ 35,019,149
Predecessor [Member] | IPO [Member]
Summary of Significant Accounting Policies (Textual)
Purchase price of property acquired		$ 645,120		$ 1,334,591
Acquisition costs		$ 10,120		$ 19,598
Number of properties | properties		1

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DEBT (Details 1)	Sep. 30, 2019 USD ($)
Mortgage Loans Payable
2019 - Remaining	$ 27,409
2020	109,182
2021	191,562
2022	196,553
2023	17,204,951
Thereafter	2,543,254
Total mortgage loans payable	20,272,911
Less: Deferred financing costs, net	35,584
Total	$ 20,237,327

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SUBSEQUENT EVENTS

9 Months Ended

Sep. 30, 2019

Subsequent Events [Abstract]

SUBSEQUENT EVENTS

13. SUBSEQUENT EVENTS

On October 30, 2019, the Company borrowed an additional $20 million under the Facility.

In October 2019, the Company, through its Operating Partnership, acquired 55 properties leased to the USPS located in various states for approximately $9.5 million. In November 2019, the Company, through its Operating Partnership, acquired 22 properties leased to the USPS located in various states for approximately $7.8 million.

As of November 11, 2019, the Company entered into definitive agreements to acquire 98 properties leased to the USPS for approximately $27.6 million, which includes $14.0 million in OP Units valued at $17.00 per unit. Formal due diligence has been completed and the transactions are expected to close in the fourth quarter, subject to the satisfaction of customary closing conditions.

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RELATED PARTY TRANSACTIONS

9 Months Ended

Sep. 30, 2019

Related Party Transactions [Abstract]

RELATED PARTY TRANSACTIONS

9. RELATED PARTY TRANSACTIONS

Management Fee Income

Prior to the IPO, the Predecessor recognized management fee income of $249,813 for the three months ended September 30, 2018 and $393,030 and $800,557 for the nine months ended September 30, 2019 and 2018, respectively, from various properties which are affiliated with the Company’s CEO and are included in fee and other income in the consolidated and combined consolidated statements of operations. Following the IPO, PRM recognized management fee income of $236,137 and $365,443, respectively, for the three and nine months ended September 30, 2019 from various properties which are affiliated with the Company’s CEO and are included in fee and other income in the consolidated statements of operations. These amounts include accrued management fees receivable of $16,344 and zero at September 30, 2019 and 2018, respectively, which is included in rents and other receivables on the consolidated and combined consolidated balance sheets.

Related Party Lease

On October 1, 2018, the Predecessor entered into a lease for office space in Cedarhurst, New York with an entity affiliated with the Predecessor (the “Office Lease”). Pursuant to the Office Lease, the monthly rent was $15,000 subject to escalations. The term of the Office Lease was five years commencing on October 1, 2018 (with rent commencing on January 1, 2019) and was set to expire on September 30, 2023. In connection with the IPO, the Office Lease was terminated. On May 17, 2019, the Company entered into a new lease for office space in Cedarhurst, New York with an entity affiliated with the Company’s CEO (the “New Lease”). Pursuant to the New Lease, the monthly rent is $15,000 subject to escalations. The term of the Office Lease is five years commencing on May 17, 2019 and will expire on May 16, 2024. For the nine months ended September 30, 2019, rent expense was $93,626 and was recorded in general and administrative expenses in the consolidated and combined consolidated statements of operations.

As of September 30, 2019, future minimum rental payments on the noncancelable lease is as follows:

Year Ending December 31,	Amount
2019 – Remaining	$	45,000
2020		183,368
2021		188,869
2022		194,535
2023		200,371
Thereafter		76,244
Total	$	888,387

Due to Affiliates

At September 30, 2019, the Company owed $0.5 million to an affiliate of the Company’s CEO for amounts funded in connection with the Company’s IPO (See Note 3. Summary of Significant Accounting Policies).

This amount is non-interest bearing and is due on demand.

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DEBT

9 Months Ended

Sep. 30, 2019

Mortgage Loans Payable [Abstract]

DEBT

5. DEBT

The following table summarizes indebtedness as of September 30, 2019 and December 31, 2018:

Borrowing	September 30, 2019		December 31, 2018
Revolving Credit Facility (1)	$	17,000,000	$	-
Vision Bank		1,538,330		15,636,243
Atlanta Postal Credit Union		-		17,313,481
First Oklahoma Bank		381,391		389,599
Vision Bank – 2018		908,190		936,750
Seller Financing (2)		445,000		-
First Oklahoma Bank – 2018		-		743,076
Total debt	$	20,272,911	$	35,019,149

(1) On September 27, 2019, the Company entered into a $100 million Senior Revolving Credit Facility (“Facility”), which includes an accordion feature that will permit the Company to borrow up to $200 million, subject to customary terms and conditions. The Facility matures in September 2023. Borrowings under the Facility carry an interest rate of either a base rate plus a range of 70 to 140 basis points or LIBOR plus a range of 170 to 240 basis points, each depending on a consolidated leverage ratio. As of September 30, 2019, the Company had $17 million drawn under the Facility and the Facility bore interest at LIBOR (at September 30, 2019, the one-month LIBOR rate was 2.02%) plus 170 bps. In addition, the Company will pay, for the period through and including the calendar quarter ending March 31, 2020, an unused facility fee on the revolving commitments under the Facility of .75% per annum for the first $100 million and .25% per annum for the portion of revolving commitments exceeding $100 million, and for the period thereafter, an unused facility fee of .25% per annum for the aggregate unused revolving commitments, with both periods utilizing calculations of daily unused commitments under the Facility. The Company’s ability to borrow under the Facility is subject to ongoing compliance with a number of customary affirmative and negative covenants. As of September 30, 2019, the Company was in compliance with the Facility’s debt covenants.

(2) 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 $105,661 with the first payable on January 2, 2021 based on a 6% interest rate per annum through January 2, 2025.

Principal payments on debt through maturity are as follows:

Year Ending December 31,	Amount
2019 – Remaining	$	27,409
2020		109,182
2021		191,562
2022		196,553
2023		17,204,951
Thereafter		2,543,254
		20,272,911
Less: Deferred financing costs, net		35,584
Total	$	20,237,327

In connection with the IPO, the Company repaid approximately $31.7 million of outstanding indebtedness and wrote off approximately $0.2 million of deferred financing costs which are recorded in loss on extinguishment of debt in the consolidated and combined consolidated statements of operations.

The Vision Bank loan, First Oklahoma Bank loan and Vision Bank – 2018 loan contain a personal guaranty of payment by Mr. Spodek.

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details 1) - USD ($)	Sep. 30, 2019	Dec. 31, 2018	Sep. 30, 2018	Dec. 31, 2017
Cash	$ 10,969,557
Restricted cash:
Maintenance reserve	602,306
ESPP reserve	7,894
Total cash and restricted cash	$ 11,579,757	$ 861,875
Predecessor [Member]
Cash		262,926
Restricted cash:
Maintenance reserve		598,949
ESPP reserve
Total cash and restricted cash		$ 861,875	$ 1,023,870	$ 694,418

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DEBT (Details) - USD ($)	Sep. 30, 2019	Dec. 31, 2018
Total mortgage loans payable	$ 3,272,911
Predecessor [Member]
Total mortgage loans payable		$ 35,019,149
Atlanta Postal Credit Union [Member]
Total mortgage loans payable
Atlanta Postal Credit Union [Member] | Predecessor [Member]
Total mortgage loans payable		17,313,481
Vision Bank - 2018 [Member]
Total mortgage loans payable	908,190
Vision Bank - 2018 [Member] | Predecessor [Member]
Total mortgage loans payable		936,750
Revolving Credit Facility [Membe]
Total mortgage loans payable	17,000,000
Revolving Credit Facility [Membe] | Predecessor [Member]
Total mortgage loans payable
Vision Bank [Member]
Total mortgage loans payable	1,538,330
Vision Bank [Member] | Predecessor [Member]
Total mortgage loans payable		15,636,243
First Oklahoma Bank - 2018 [Member]
Total mortgage loans payable
First Oklahoma Bank - 2018 [Member] | Predecessor [Member]
Total mortgage loans payable		743,076
First Oklahoma Bank [Member]
Total mortgage loans payable	381,391
First Oklahoma Bank [Member] | Predecessor [Member]
Total mortgage loans payable		389,599
Seller Financing [Member]
Total mortgage loans payable	$ 445,000
Seller Financing [Member] | Predecessor [Member]
Total mortgage loans payable

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INCOME TAXES (Details Narrative) - USD ($)	2 Months Ended	3 Months Ended		5 Months Ended	9 Months Ended
	May 16, 2019	Sep. 30, 2019	Sep. 30, 2018	May 16, 2019	Sep. 30, 2019	Sep. 30, 2018	Dec. 31, 2018
Income Taxes (Textual)
Income tax expense		$ (6,259)			$ 39,749
Unrecognized tax benefits		516,529			516,529
Deferred tax liability
Predecessor [Member]
Income Taxes (Textual)
Income tax expense			$ (143,382)	$ (39,749)		$ (83,742)
Deferred tax liability							$ 793,847
PRM [Member]
Income Taxes (Textual)
Income tax expense		6,259			6,259
UPH [Member]
Income Taxes (Textual)
Income tax expense		$ 0			$ 39,749
Effective tax rate		13.40%			13.40%
Statutory rate		21.00%			21.00%
UPH [Member] | Predecessor [Member]
Income Taxes (Textual)
Income tax expense			$ (143,382)			$ (83,742)
Effective tax rate						6.40%
Statutory rate			21.00%			21.00%
Deferred tax liability	$ 727,952			$ 727,952
Reverse [Member]
Income Taxes (Textual)
Unrecognized tax benefits		$ 191,391			$ 191,391

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STOCKHOLDER'S EQUITY (Details Narrative) - USD ($)	1 Months Ended			3 Months Ended	9 Months Ended
	Sep. 30, 2019	Jun. 30, 2019	May 16, 2019	Sep. 30, 2019	Sep. 30, 2019
Stockholders Equity (Textual)
Stockholder's Equity net proceeds		$ 64,710,261
Predecessor [Member]
Stockholders Equity (Textual)
Other expenses			$ 6,400,000
IPO [Member]
Stockholders Equity (Textual)
Stockholder's Equity shares issued					4,500,000
Stockholder's Equity net proceeds					$ 71,100,000
Stockholder underwriting discount					$ 5,400,000
Other shares					100,000
Common stock voting rights					Each outstanding share of Class B Common Stock entitles its holder to 50 votes on all matters on which Class A common stockholders are entitled to vote, including the election of directors, and holders of shares of Class A Common Stock and Class B Common Stock will vote together as a single class. Shares of Class B Common Stock are convertible into shares of Class A Common Stock, on a one-for-one basis, at the election of the holder at any time. Additionally, one share of Class B Common Stock will automatically convert into one share of Class A common stock for each 49 OP Units (transferred (including by the exercise of redemption rights afforded with respect to OP Units) to a person other than a permitted transferee. This ratio is a function of the fact that each share of Class B Common Stock entitles its holder to 50 votes on all matters on which Class A common stockholders are entitled to vote and maintains the voting proportion of holders of Class B Common Stock with the holder's economic interest in our company.
Other expenses					$ 6,400,000
Class A [Member] | IPO [Member]
Stockholders Equity (Textual)
Stockholder's Equity shares issued					637,058
Long Term Incentive Plan percentage	15.00%			15.00%	15.00%
Class B [Member] | IPO [Member]
Stockholders Equity (Textual)
Stockholder's Equity shares issued					27,206
Common Stock
Stockholders Equity (Textual)
Stockholder's Equity shares issued		4,500,000
Stockholder's Equity net proceeds		$ 45,000
Additional Paid-In Capital
Stockholders Equity (Textual)
Stockholder's Equity net proceeds		64,665,261
Total stockholder's equity
Stockholders Equity (Textual)
Stockholder's Equity net proceeds		$ 64,710,261
Chief Executive Officer [Member] | Noncontrolling Interest [Member]
Stockholders Equity (Textual)
Operating Partnership units interest	1,333,112			1,333,112	1,333,112
Other shares				5,298	120,004
LTIP Units					5,298
Long Term Incentive Plan percentage	21.50%			21.50%	21.50%
Non employee directors [Member] | Class A [Member]
Stockholders Equity (Textual)
Restricted shares				317	38,235
Net compensation expenses				$ 400,000
President [Member] | Class A [Member]
Stockholders Equity (Textual)
Restricted shares					58,824
Other Employees [Member] | Class A [Member]
Stockholders Equity (Textual)
Restricted shares					33,824
Restricted Stock and Other Awards [Member]
Stockholders Equity (Textual)
Shares issued under the Equity Incentive Plan					541,584
Net compensation expenses					$ 600,000
Total unrecognized compensation cost related to unvested awards	$ 4,000,000			$ 4,000,000	$ 4,000,000
Restricted Stock and Other Awards [Member] | Chief Executive Officer [Member]
Stockholders Equity (Textual)
LTIP Units	41,177				73,529
Restricted shares					17,647

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Consolidated and Combined Consolidated Balance Sheets (Unaudited) - USD ($)	Sep. 30, 2019	Dec. 31, 2018
Real estate properties
Land	$ 16,827,724
Buildings and improvements	57,177,951
Tenant improvements	2,114,364
Total real estate properties	76,120,039
Less: accumulated depreciation	(8,180,839)
Total real estate properties, net	67,939,200
Cash	10,969,557
Escrows and reserves	610,200
Rent and other receivables	1,138,621
Prepaid expenses and other assets	2,853,298
Deferred rent receivable	31,687
In-place lease intangibles (net of accumulated amortization of $5,628,459 and $4,388,699, respectively)	4,776,515
Above market leases (net of accumulated amortization of $16,539 and $8,688, respectively)	9,401
Total assets	88,328,479
Liabilities
Secured borrowings, net	3,237,327
Revolving credit facility	17,000,000
Accounts payable, accrued expenses and other	4,224,599
Below market leases (net of accumulated amortization of $1,860,167 and $1,525,540, respectively)	5,365,118
Deferred tax liability, net
Due to affiliates	512,530
Total liabilities	30,339,574
Commitments and contingencies
Equity (deficit)
Common stock, PSTL - $.01 par value per share Class A, 500,000,000 shares authorized: 5,285,904 shares issued and outstanding	52,859
Common stock, PSTL - $.01 par value per share Class B, 27,206 shares authorized: 27,206 shares issued and outstanding	272
UPH - no par, 1,000 shares authorized: 1,000 shares issued and outstanding
NPM - no par, 200 shares authorized: 200 shares issued and outstanding
Additional paid-in capital	46,502,630
Accumulated deficit	(1,034,471)
Member's deficit
Total Stockholders' and Predecessor Equity (Deficit)	45,521,290
Operating Partnership unitholders' noncontrolling interests	12,467,615
Noncontrolling interest in properties
Total equity (deficit)	57,988,905
Total liabilities and equity (deficit)	$ 88,328,479
Predecessor [Member]
Real estate properties
Land		$ 7,239,213
Buildings and improvements		29,550,076
Tenant improvements		1,646,215
Total real estate properties		38,435,504
Less: accumulated depreciation		(7,121,532)
Total real estate properties, net		31,313,972
Cash		262,926
Escrows and reserves		598,949
Rent and other receivables		601,670
Prepaid expenses and other assets		146,014
Deferred rent receivable		14,060
In-place lease intangibles (net of accumulated amortization of $5,628,459 and $4,388,699, respectively)		2,735,927
Above market leases (net of accumulated amortization of $16,539 and $8,688, respectively)		10,914
Total assets		35,684,432
Liabilities
Secured borrowings, net		34,792,419
Revolving credit facility
Accounts payable, accrued expenses and other		1,869,084
Below market leases (net of accumulated amortization of $1,860,167 and $1,525,540, respectively)		3,842,495
Deferred tax liability, net		793,847
Due to affiliates
Total liabilities		41,297,845
Commitments and contingencies
Equity (deficit)
Common stock, PSTL - $.01 par value per share Class A, 500,000,000 shares authorized: 5,285,904 shares issued and outstanding
Common stock, PSTL - $.01 par value per share Class B, 27,206 shares authorized: 27,206 shares issued and outstanding
UPH - no par, 1,000 shares authorized: 1,000 shares issued and outstanding		4,000,000
NPM - no par, 200 shares authorized: 200 shares issued and outstanding		200
Additional paid-in capital		3,441,493
Accumulated deficit		(11,003,876)
Member's deficit		(2,095,823)
Total Stockholders' and Predecessor Equity (Deficit)		(5,658,006)
Operating Partnership unitholders' noncontrolling interests
Noncontrolling interest in properties		44,593
Total equity (deficit)		(5,613,413)
Total liabilities and equity (deficit)		$ 35,684,432

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EARNINGS PER SHARE (Tables)

9 Months Ended

Sep. 30, 2019

Earnings Per Share [Abstract]

Schedule of weighted average shares basic and dilutive earnings per share

The following table shows the amounts used in computing the Company’s basic and diluted earnings per share. As of the three and nine months ended September 30, 2019, there is no dilution to earnings per share because there is a net loss.

	Three Months Ended September 30, 2019			Nine Months Ended September 30, 2019
Numerator for earnings per share – basic and diluted
Net loss attributable to common stockholders	$	(307,969	)		(699,765	)
Less: income attributable to participating securities		-			(16,715	)
Numerator for earnings per share – basic and diluted	$	(307,969	)	$	(716,480	)
Denominator for earnings per share – basic and diluted	$	5,164,264		$	5,164,264
Basic and diluted earnings per share	$	(0.06	)	$	(0.14	)

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INTANGIBLE ASSETS AND LIABILITIES (Tables)

9 Months Ended

Sep. 30, 2019

Intangible Assets and Liabilities [Abstract]

Schedule of intangible assets and liabilities

The balance of these intangible assets and liabilities will be amortized as follows:

Year ending December 31,	In-Place Lease Intangibles		Below Market Leases		Above Market Leases
2019 – Remaining	$	567,742	$	167,579	$	1,372
2020		1,850,310		622,436		4,903
2021		1,304,600		555,645		1,975
2022		516,851		503,120		1,151
2023		265,875		455,109		-
Thereafter		271,137		3,061,229		-
Total	$	4,776,515	$	5,365,118	$	9,401

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Consolidated and Combined Consolidated Statements of Cash Flows (Unaudited) - USD ($)	9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018
Cash flows from operating activities
Net (loss) income	$ (423,035)
Adjustments to reconcile net (loss) income to net cash provided by operating activities:
Depreciation	1,074,793
Amortization of in-place intangibles	1,239,760
Amortization of deferred financing costs	9,558
Amortization of above market leases	7,851
Amortization of below market leases	(334,627)
Equity-based compensation	584,873
Loss on extinguishment of debt	185,586
Deferred rent receivable	(17,627)
Deferred rent expense payable	(41,374)
Deferred tax liability	(65,895)
Change in assets and liabilities
Rent and other receivables	(802,618)
Prepaid expenses and other assets	(260,038)
Due to affiliates	8,569
Accounts payable, accrued expenses and other	935,122
Net cash provided by operating activities	2,100,898
Cash flows from investing activities
Acquisition of real estate	(38,925,771)
Capital improvements	(105,116)
Acquisition deposits	(410,000)
Net cash used in investing activities	(39,440,887)
Cash flows from financing activities
Net proceeds from issuance of common stock	66,624,167
Formation transactions	(2,007,417)
Proceeds from mortgage payable	445,000
Repayments of mortgages payable	(32,191,238)
Proceeds from revolving credit facility	17,000,000
Debt issuance costs	(1,371,931)
Capital contributions	2,068,252
Distributions and dividends	(2,508,962)
Net cash provided by (used in) financing activities	48,057,871
Net increase in cash and restricted cash	10,717,882
Cash and restricted cash at beginning of period	861,875
Cash and restricted cash at end of period	11,579,757
Predecessor [Member]
Cash flows from operating activities
Net (loss) income		$ 917,769
Adjustments to reconcile net (loss) income to net cash provided by operating activities:
Depreciation		747,125
Amortization of in-place intangibles		616,450
Amortization of deferred financing costs		9,375
Amortization of above market leases		6,319
Amortization of below market leases		(215,955)
Equity-based compensation
Loss on extinguishment of debt
Deferred rent receivable		1,481
Deferred rent expense payable
Deferred tax liability		(255,224)
Change in assets and liabilities
Rent and other receivables		2,863
Prepaid expenses and other assets		(12,737)
Due to affiliates
Accounts payable, accrued expenses and other		406,829
Net cash provided by operating activities		2,224,295
Cash flows from investing activities
Acquisition of real estate		(1,334,591)
Capital improvements		(92,525)
Acquisition deposits
Net cash used in investing activities		(1,427,116)
Cash flows from financing activities
Net proceeds from issuance of common stock
Formation transactions
Proceeds from mortgage payable		960,000
Repayments of mortgages payable		(798,179)
Proceeds from revolving credit facility
Debt issuance costs
Capital contributions		3,446,987
Distributions and dividends		(4,076,535)
Net cash provided by (used in) financing activities		(467,727)
Net increase in cash and restricted cash		329,452
Cash and restricted cash at beginning of period	$ 861,875	694,418
Cash and restricted cash at end of period		$ 1,023,870

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DEBT (Details Narrative) - USD ($)		9 Months Ended
	Sep. 27, 2019	Sep. 30, 2019
Mortgage Loans Payable (Textual)
Write-off deferred financing costs		$ 200,000
Debt repayment		$ 31,700,000
Revolving Credit Facility [Membe]
Mortgage Loans Payable (Textual)
Revolving credit facility	$ 100,000,000
Maximum borrowing facility	$ 200,000,000
Credit facility , maturity	Sep. 30, 2023
Interest rate	Borrowings under the Facility carry an interest rate of either a base rate plus a range of 70 to 140 basis points or LIBOR plus a range of 170 to 240 basis points, each depending on a consolidated leverage ratio.
Unused facility fee	Unused facility fee on the revolving commitments under the Facility of .75% per annum for the first $100 million and .25% per annum for the portion of revolving commitments exceeding $100 million, and for the period thereafter, an unused facility fee of .25% per annum for the aggregate unused revolving commitments
Payment frquency		Five annual payments of principal and interest
Borrowing amount of seller financing		$ 445,000
First date for the payments on seller financing		Jan. 02, 2021

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THE COMPANY'S IPO AND THE FORMATION TRANSACTIONS (Details Narrative) - Predecessor [Member]	1 Months Ended
	May 16, 2019 USD ($) $ / shares shares
The Company's Initial Public Offering and Formation Transactions (Textual)
Sold IPO | shares	4,500,000
Public offering price | $ / shares	$ 17.00
Gross proceeds from initial public offering	$ 76,500,000
Net proceeds of initial public offering	71,100,000
Underwriting discounts	5,400,000
Repayment of outstanding indebtedness	$ 31,700,000
Formation transactions, description	The initial properties and other interests were contributed in exchange for 1,333,112 OP Units, 637,058 shares of our Class A Common Stock, 27,206 shares of our Class B Common Stock and $1.9 million of cash. In addition, the Operating Partnership purchased 100% interests in 81 post office properties (the “Acquisition Properties”) in exchange for $26.9 million in cash, including approximately $1.0 million to be paid to Mr. Spodek, the Company’s chief executive officer and a director for his non-controlling ownership in nine of the Acquisition Properties.
Other expenses	$ 6,400,000

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INTANGIBLE ASSETS AND LIABILITIES (Details)	Sep. 30, 2019 USD ($)
Total	$ 4,776,515
Above Market Leases [Member]
2019 - Remaining	1,372
2020	4,903
2021	1,975
2022	1,151
2023
Thereafter
Total	9,401
In-Place Lease Intangibles [Member]
2019 - Remaining	567,742
2020	1,850,310
2021	1,304,600
2022	516,851
2023	265,875
Thereafter	271,137
Total	4,776,515
Below Market Leases [Member]
2019 - Remaining	167,579
2020	622,436
2021	555,645
2022	503,120
2023	455,109
Thereafter	3,061,229
Total	$ 5,365,118

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STOCKHOLDER'S EQUITY

9 Months Ended

Sep. 30, 2019

Equity [Abstract]

STOCKHOLDER'S EQUITY

11. STOCKHOLDER’S EQUITY

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

Noncontrolling Interests

Noncontrolling interests in the Company primarily represent Common Units held by the Predecessor’s prior investors and LTIP Units issued to the Company’s CEO in connection with the IPO and in lieu of cash compensation. During the three months ended September 30, 2019, the Company issued 5,298 LTIP Units to an employee. Noncontrolling interests consisted of 1,333,112 Common Units and 120,004 LTIP Units and represented approximately 21.5% of the Operating Partnership as of September 30, 2019. Operating Partnership units and shares of common stock have essentially the same economic characteristics, as they share equally in the total net income or loss distributions of the Operating Partnership. Beginning on or after the date which is 12 months after the later of (i) the completion of the IPO or (ii) the date on which a person first became a holder of common units, each limited partner and assignees of limited partners will have the right, subject to the terms and conditions set forth in the partnership agreement to require the Operating Partnership to redeem all or a portion of the Common Units held by such limited partner or assignee in exchange for shares of the Company’s Class A Common Stock, on a one-for-one basis, or, at the Company’s sole discretion, cash, in an amount per Common Unit equal to the value of one share of Class A Common Stock, determined in accordance with and subject to adjustment under the partnership agreement. The Operating Partnership unitholders are entitled to share in cash distributions from the Operating Partnership in proportion to its percentage ownership of Common Units.

Restricted Stock and Other Awards

Pursuant to the Company’s 2019 Equity Incentive Plan, or Equity Incentive Plan, the Company may grant equity incentive awards to our directors, officers, employees and consultants. Upon completion of the IPO, the Company issued 73,529 LTIP units to the Company’s CEO, 58,824 restricted shares of Class A Common Stock to the Company’s president, 33,824 restricted shares of Class A Common Stock to other employees and 38,235 restricted shares of Class A Common Stock to the Company’s non-employee directors under the Equity Incentive Plan. In addition, the Company issued 41,177 LTIP Units to the Company’s CEO and an aggregate of 17,647 restricted shares of Class A Common Stock to its non-employee directors, in each case in lieu of cash compensation for the twelve month period following completion of the IPO. During the quarter ended September 30, 2019, the Company issued an aggregate 5,298 LTIP Units and 317 restricted shares of Class A Common Stock to certain employees. The maximum number of shares of Class A Common Stock that is available to be issued under our Equity Incentive Plan is 541,584 shares. To the extent an award granted under the Equity Incentive Plan expires or terminates, the shares subject to any portion of the award that expires or terminates without having been exercised or paid, as the case may be, will again become available for the issuance of additional awards.

Awards issued in connection with the IPO will vest in three equal, annual installments on each of the first three anniversaries of the date of grant. Awards issued to the Company’s non-employee directors in lieu of cash compensation vest on the anniversary of the grant and awards issued as equity compensation vest in three equal, annual installments on each of the first three anniversaries of the date of grant. Awards issued to the Company’s CEO in lieu of cash compensation cliff vest on the eighth anniversary of the date of grant. For the three and nine months ended September 30, 2019, the Company recognized compensation expenses of $0.4 million and $0.6 million related to all awards, respectively. As of September 30, 2019, there was $4.0 million of total unrecognized compensation cost related to unvested awards, which is expected to be recognized over a weighted average period of 3.6 years.

Employee Stock Purchase Plan

In connection with the IPO, the Postal Realty Trust, Inc. 2019 Qualified Employee Stock Purchase Plan, or the ESPP, allows the Company’s employees to purchase shares of the Company’s Class A Common Stock at a discount. A total of 100,000 shares of Class A common stock will be reserved for sale and authorized for issuance under the ESPP. The Code permits us to provide up to a 15% discount on the lesser of the fair market value of such shares of stock at the beginning of the offering period and the code of the offering period. No shares have been purchased as of September 30, 2019.

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OPERATING LEASE AGREEMENTS

9 Months Ended

Sep. 30, 2019

Leases, Operating [Abstract]

OPERATING LEASE AGREEMENTS

7. OPERATING LEASE AGREEMENTS

At September 30, 2019, all of the properties owned by the Company are leased to a single tenant, the USPS, other than a de-minimis non-postal tenant that shares space in a building leased to the USPS. The leases expire at various dates through January 31, 2028.

Future minimum rental income to be received on non-cancellable leases is as follows:

Year Ending December 31,	Amount
2019 – Remaining	$	2,313,353
2020		8,090,250
2021		6,934,226
2022		4,403,081
2023		3,107,616
Thereafter		4,930,879
Total	$	29,779,405

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OPERATING LEASE AGREEMENTS (Details)	Sep. 30, 2019 USD ($)
Leases, Operating [Abstract]
2019 - Remaining	$ 2,313,353
2020	8,090,250
2021	6,934,226
2022	4,403,081
2023	3,107,616
Thereafter	4,930,879
Total	$ 29,779,405

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RELATED PARTY TRANSACTIONS (Details Narrative) - USD ($)		3 Months Ended		9 Months Ended
	Oct. 01, 2018	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Related Party Transactions (Textual)
Management fee income				$ 393,030
Accrued management fees receivable		$ 16,344		91,713
Income earned after the IPO		$ 236,137		$ 365,443
Predecessor [Member]
Related Party Transactions (Textual)
Management fee income			$ 249,813		$ 800,557
Accrued management fees receivable					$ 0
Related party lease, description	On October 1, 2018, the Predecessor entered into a lease for office space in Cedarhurst, New York with an entity affiliated with the Predecessor (the “Office Lease”). Pursuant to the Office Lease, the monthly rent was $15,000 subject to escalations. The term of the Office Lease was five years commencing on October 1, 2018 (with rent commencing on January 1, 2019) and was set to expire on September 30, 2023. In connection with the IPO, the Office Lease was terminated. On May 17, 2019, the Company entered into a new lease for office space in Cedarhurst, New York with an entity affiliated with the Company’s CEO (the “New Lease”). Pursuant to the New Lease, the monthly rent is $15,000 subject to escalations. The term of the Office Lease is five years commencing on May 17, 2019 and will expire on May 16, 2024. For the nine months ended September 30, 2019, rent expense was $93,626 and was recorded in general and administrative expenses in the consolidated and combined consolidated statements of operations.

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OPERATING LEASE AGREEMENTS (Tables)

9 Months Ended

Sep. 30, 2019

Leases, Operating [Abstract]

Schedule of future minimum rental income

Future minimum rental income to be received on non-cancellable leases is as follows:

Year Ending December 31,	Amount
2019 – Remaining	$	2,313,353
2020		8,090,250
2021		6,934,226
2022		4,403,081
2023		3,107,616
Thereafter		4,930,879
Total	$	29,779,405

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THE COMPANY'S IPO AND THE FORMATION TRANSACTIONS (Tables)

9 Months Ended

Sep. 30, 2019

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

Schedule of predecessor statement of operations

All balances as of December 31, 2018 and for the three and nine months ended September 30, 2018 are those of the Predecessor.

	Predecessor						Postal Realty Trust, Inc.
	April 1,  2019  through May 16, 2019			January 1,  2019  through May 16, 2019			May 17, 2019 through September 30, 2019
Revenues:
Rent income	$	756,969		$	2,249,355		$	3,486,541
Tenant reimbursements		111,219			348,075			504,429
Fee and other income		141,033			427,959			414,138
Total revenues	$	1,009,221		$	3,025,389		$	4,405,108
Operating Expenses:
Real estate taxes		114,783			358,693			521,424
Property operating expenses		117,958			357,779			464,060
General and administrative		106,549			501,204			1,884,024
Equity-based compensation		-			-			584,873
Depreciation and amortization		245,313			725,756			1,588,797
Total operating expenses	$	584,603		$	1,943,432		$	5,043,178
Income (loss) from operations		424,618			1,081,957			(638,070	)
Interest expense, net:
Contractual interest expense		(212,352	)		(570,819	)		(64,604	)
Amortization of deferred financing costs		(1,592	)		(4,773	)		(4,785	)
Loss on early extinguishment of Predecessor debt		-			-			(185,586	)
Interest income		-			1,134			2,260
Total interest expense, net		(213,944	)		(574,458	)		(252,715	)
Income (loss) before income tax expense		210,674			507,499			(890,785	)
Income tax (benefit) expense		-			(39,749	)		-
Net income (loss)	$	210,674		$	467,750		$	(890,785	)
Less:
Net income attributable to noncontrolling interest in properties		(1,493	)		(4,336	)		-
Net income attributable to Predecessor	$	209,181		$	463,414			-
Net loss attributable to Operating Partnership unitholders’ noncontrolling interests								191,020
Net loss attributable to common stockholders							$	(699,765	)

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Consolidated and Combined Consolidated Statements of Operations (Unaudited) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Revenues
Rent income	$ 2,387,082		$ 5,735,896
Tenant reimbursements	342,419		852,504
Fee and other income	278,846		842,097
Total revenues	3,008,347		7,430,497
Operating expenses
Real estate taxes	353,663		880,117
Property operating expenses	332,892		821,839
General and administrative	1,207,197		2,385,228
Equity-based compensation	394,530		584,873
Depreciation and amortization	1,066,338		2,314,553
Total operating expenses	3,354,620		6,986,610
Income (loss) from operations	(346,273)		443,887
Interest expense, net:
Contractual interest expense	(48,916)		(635,423)
Amortization of deferred financing costs	(4,523)		(9,558)
Loss on early extinguishment of Predecessor debt			(185,586)
Interest income	1,136		3,394
Total interest expense, net	(52,303)		(827,173)
Income (loss) before income tax (expense) benefit	(398,576)		(383,286)
Income tax (expense) benefit	6,259		(39,749)
Net income (loss)	(392,317)		(423,035)
Less: Net income attributable to noncontrolling interest in properties			(4,336)
Net (income) loss attributable to Predecessor			(463,414)
Net loss attributable to Operating Partnership unitholders' noncontrolling interests	84,348		191,020
Net income (loss) attributable to common stockholders	$ (307,969)		$ (699,765)
Net income (loss) per share (basic and diluted)	$ (0.06)		$ (0.14)
Weighted average common shares outstanding (basic and diluted)	5,164,264		5,164,264
Predecessor [Member]
Revenues
Rent income		$ 1,417,534		$ 4,199,767
Tenant reimbursements		220,676		668,502
Fee and other income		255,971		862,317
Total revenues		1,894,181		5,730,586
Operating expenses
Real estate taxes		227,373		688,953
Property operating expenses		203,994		639,289
General and administrative		282,361		1,086,384
Equity-based compensation
Depreciation and amortization		457,907		1,363,575
Total operating expenses		1,171,635		3,778,201
Income (loss) from operations		722,546		1,952,385
Interest expense, net:
Contractual interest expense		(361,743)		(1,112,353)
Amortization of deferred financing costs		(3,126)		(9,375)
Loss on early extinguishment of Predecessor debt
Interest income		1,158		3,370
Total interest expense, net		(363,711)		(1,118,358)
Income (loss) before income tax (expense) benefit		358,835		834,027
Income tax (expense) benefit		143,382		83,742
Net income (loss)		502,217		917,769
Less: Net income attributable to noncontrolling interest in properties		(2,829)		(9,462)
Net (income) loss attributable to Predecessor		$ 499,388		$ 908,307

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THE COMPANY'S IPO AND THE FORMATION TRANSACTIONS (Details) - USD ($)	1 Months Ended	2 Months Ended	3 Months Ended					4 Months Ended	5 Months Ended	9 Months Ended
	Jun. 30, 2019	May 16, 2019	Sep. 30, 2019	Mar. 31, 2019	Sep. 30, 2018	Jun. 30, 2018	Mar. 31, 2018	Sep. 30, 2019	May 16, 2019	Sep. 30, 2019	Sep. 30, 2018
Revenues:
Rent income			$ 2,387,082							$ 5,735,896
Tenant reimbursements			342,419							852,504
Fee and other income			278,846							842,097
Total revenues			3,008,347							7,430,497
Operating Expenses:
Real estate taxes			353,663							880,117
Property operating expenses			332,892							821,839
General and administrative			1,207,197							2,385,228
Equity based compensation			394,530							584,873
Depreciation and amortization			1,066,338							2,314,553
Total operating expenses			3,354,620							6,986,610
Income from operations			(346,273)							443,887
Interest expense, net:
Contractual interest expense			48,916							635,423
Amortization of deferred financing costs			(4,523)							(9,558)
Loss on early extinguishment of Predecessor debt										(185,586)
Interest income			1,136							3,394
Income (loss) before income tax (expense) benefit			(398,576)							(383,286)
Income tax expense			(6,259)							39,749
Net income (loss)	$ (498,468)		(392,317)					$ (498,468)		(423,035)
Net loss attributable to common stockholders			$ (307,969)							$ (699,765)
Predecessor [Member]
Revenues:
Rent income		$ 756,969			$ 1,417,534				$ 2,249,355		$ 4,199,767
Tenant reimbursements		111,219			220,676				348,075		668,502
Fee and other income		141,033			255,971				427,959		862,317
Total revenues		1,009,221			1,894,181				3,025,389		5,730,586
Operating Expenses:
Real estate taxes		117,723			227,373				367,512		688,953
Property operating expenses		115,010			203,994				366,716		639,289
General and administrative		106,557			282,361				483,448		1,086,384
Equity based compensation
Depreciation and amortization		245,313			457,907				725,756		1,363,575
Total operating expenses		584,603			1,171,635				1,943,432		3,778,201
Income from operations		424,618			722,546				1,081,957		1,952,385
Interest expense, net:
Contractual interest expense		(212,352)			361,743				(570,819)		1,112,353
Amortization of deferred financing costs		(1,592)			(3,126)				(4,773)		(9,375)
Loss on early extinguishment of Predecessor debt
Interest income					1,158				1,134		3,370
Total interest expense, net		(213,944)							(574,458)
Income (loss) before income tax (expense) benefit		210,674			358,835				507,499		834,027
Income tax expense					(143,382)				(39,749)		(83,742)
Net income (loss)		210,674		$ 257,076	$ 502,217	$ 321,089	$ 94,463		467,750		$ 917,769
Less: Net income attributable to noncontrolling interest in properties		(1,493)							(4,336)
Less: Net income attributable to Predecessor		$ 209,181							$ 463,414
Postal Realty Trust, Inc.
Revenues:
Rent income								3,486,541
Tenant reimbursements								504,429
Fee and other income								414,138
Total revenues								4,405,108
Operating Expenses:
Real estate taxes								521,424
Property operating expenses								464,060
General and administrative								1,884,024
Equity based compensation								584,873
Depreciation and amortization								1,588,797
Total operating expenses								5,043,178
Income from operations								(638,070)
Interest expense, net:
Contractual interest expense								(64,604)
Amortization of deferred financing costs								(4,785)
Loss on early extinguishment of Predecessor debt								(185,586)
Interest income								2,260
Total interest expense, net								(252,715)
Income (loss) before income tax (expense) benefit								(890,785)
Income tax expense								(6,259)
Net income (loss)								(890,785)
Less: Net income attributable to noncontrolling interest in properties
Less: Net income attributable to Predecessor
Less: Net loss attributable to Operating Partnership unitholders' noncontrolling interests								191,020
Net loss attributable to common stockholders								$ (699,765)

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THE COMPANY'S IPO AND THE FORMATION TRANSACTIONS

9 Months Ended

Sep. 30, 2019

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

THE COMPANY'S IPO AND THE FORMATION TRANSACTIONS

2. THE COMPANY’S IPO AND THE FORMATION TRANSACTIONS

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

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

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

Pursuant to the Formation Transactions, the Company, directly or through the Operating Partnership, acquired the entities that comprise the Predecessor. The initial properties and other interests were contributed in exchange for 1,333,112 OP Units, 637,058 shares of our Class A Common Stock, 27,206 shares of our Class B Common Stock and $1.9 million of cash. In addition, the Operating Partnership purchased 100% interests in 81 post office properties (the “Acquisition Properties”) in exchange for $26.9 million in cash, including approximately $1.0 million paid to Mr. Spodek, the Company’s chief executive officer and a director for his non-controlling ownership in nine of the Acquisition Properties.

Because of the timing of the IPO and the Formation Transactions, the Company’s financial condition as of December 31, 2018 and results of operations for the three and nine months ended September 30, 2018 reflect the financial condition and results of operations of the Predecessor. The results of operations for the three months ended September 30, 2019 reflects solely the operations of the Company and the results of operations for the nine months ended September 30, 2019 reflect the results of operations of the Predecessor together with the Company, while the financial condition as of September 30, 2019 reflects solely the Company. References in these notes to consolidated financial statements to “Postal Realty Trust, Inc.” signify the Company for the period after the completion of the IPO and the Formation Transactions and the Predecessor for all prior periods.

The following is a summary of the Predecessor Statements of Operations for the period from April 1, 2019 through May 16, 2019 and for the period from January 1, 2019 through May 16, 2019, and the Company’s Statement of Operations for the period from May 17, 2019 through September 30, 2019. These amounts are included in the consolidated and combined consolidated statement of operations herein for the three and Nine months ended September 30, 2019. All balances as of December 31, 2018 and for the three and nine months ended September 30, 2018 are those of the Predecessor.

	Predecessor						Postal Realty Trust, Inc.
	April 1,  2019  through May 16, 2019			January 1,  2019  through May 16, 2019			May 17, 2019 through September 30, 2019
Revenues:
Rent income	$	756,969		$	2,249,355		$	3,486,541
Tenant reimbursements		111,219			348,075			504,429
Fee and other income		141,033			427,959			414,138
Total revenues	$	1,009,221		$	3,025,389		$	4,405,108
Operating Expenses:
Real estate taxes		114,783			358,693			521,424
Property operating expenses		117,958			357,779			464,060
General and administrative		106,549			501,204			1,884,024
Equity-based compensation		-			-			584,873
Depreciation and amortization		245,313			725,756			1,588,797
Total operating expenses	$	584,603		$	1,943,432		$	5,043,178
Income (loss) from operations		424,618			1,081,957			(638,070	)
Interest expense, net:
Contractual interest expense		(212,352	)		(570,819	)		(64,604	)
Amortization of deferred financing costs		(1,592	)		(4,773	)		(4,785	)
Loss on early extinguishment of Predecessor debt		-			-			(185,586	)
Interest income		-			1,134			2,260
Total interest expense, net		(213,944	)		(574,458	)		(252,715	)
Income (loss) before income tax expense		210,674			507,499			(890,785	)
Income tax (benefit) expense		-			(39,749	)		-
Net income (loss)	$	210,674		$	467,750		$	(890,785	)
Less:
Net income attributable to noncontrolling interest in properties		(1,493	)		(4,336	)		-
Net income attributable to Predecessor	$	209,181		$	463,414			-
Net loss attributable to Operating Partnership unitholders’ noncontrolling interests								191,020
Net loss attributable to common stockholders							$	(699,765	)

XML

OPERATING LEASE AGREEMENTS (Details Narrative)	9 Months Ended
	Sep. 30, 2019
Operating Lease Agreements (Textual)
Lease expiration, description	The leases expire at various dates through January 31, 2028.

XML

EARNINGS PER SHARE (Details) - USD ($)	3 Months Ended	9 Months Ended
	Sep. 30, 2019	Sep. 30, 2019
Earnings Per Share [Abstract]
Net loss attributable to common stockholders	$ (307,969)	$ (699,765)
Less: income attributable to participating securities		(16,715)
Numerator for earnings per share - basic and diluted	$ (307,969)	$ (716,480)
Denominator for earnings per share - basic and diluted (in shares)	5,164,264	5,164,264
Basic and diluted earnings per share (in dollars per share)	$ (0.06)	$ (0.14)

XML

ORGANIZATION AND DESCRIPTION OF BUSINESS (Details Narrative) - $ / shares	1 Months Ended
	May 16, 2019	Sep. 30, 2019	May 15, 2019
Organization and Description of Business (Textual)
Percentage of interest in operating partnership		78.50%
Predecessor [Member]
Organization and Description of Business (Textual)
Common stock, shares authorized			600,000,000
Common stock, par value			$ 0.01
IPO [Member] | Predecessor [Member]
Organization and Description of Business (Textual)
Common stock, shares authorized			500,000,000
Common stock, par value			$ 0.01
Preferred stock, shares authorized			100,000,000
Real estate investment trust, description	The Company intends to qualify and elect to qualify as a real estate investment trust (“REIT”) under the Code beginning with its short taxable year ending December 31, 2019. As a REIT, the Company generally will not be subject to federal income tax to the extent that it distributes at least 90% of its taxable income for each tax year to its stockholders.
Class A [Member]
Organization and Description of Business (Textual)
Common stock, shares authorized		500,000,000
Common stock, par value		$ 0.01
Common stock, shares issued		5,285,904
Class A [Member] | Predecessor [Member]
Organization and Description of Business (Textual)
Common stock, par value	$ 0.01
Class B [Member]
Organization and Description of Business (Textual)
Common stock, shares authorized		27,206
Common stock, par value		$ 0.01
Common stock, shares issued		27,206

XML

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

9 Months Ended

Sep. 30, 2019

Accounting Policies [Abstract]

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The accompanying consolidated and combined consolidated financial statements of the Company include the financial position and results of operations of the Company, the Operating Partnership and its wholly owned subsidiaries. The Predecessor represents a combination of certain entities holding interests in real estate that were commonly controlled prior to the Formation Transactions. Due to their common control, the financial statements of the separate entities which own the properties and the management company are presented on a combined basis. The effects of all significant intercompany balances and transactions have been eliminated.

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

A non-controlling interest is defined as the portion of the equity in an entity not attributable, directly or indirectly, to the Company. Non-controlling interests are required to be presented as a separate component of equity in the consolidated and combined consolidated balance sheets. Accordingly, the presentation of net income is modified to present the income attributed to controlling and non-controlling interests.

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

The information furnished in the accompanying consolidated and combined consolidated financial statements reflects all adjustments that, in the opinion of management, are necessary for a fair presentation of the aforementioned consolidated and combined consolidated financial statements for the interim periods. Operating results for the three and nine months ended September 30, 2019 are not necessarily indicative of the results that may be expected for the year ending December 31, 2019. These interim financial statements should be read in conjunction with, and follow the same policies and procedures as outlined in the audited combined consolidated financial statements for the year ended December 31, 2018, included in the Company’s final prospectus dated May 14, 2019.

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 and disclosure of commitments and contingencies at the date of the consolidated and combined consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ materially from these estimates.

Offering and Other Costs

Certain of the costs related to the IPO and the Formation Transactions paid by an affiliate of the Company’s initial sole shareholder were reimbursed by the Company from the proceeds of the IPO. Offering costs were recorded in stockholders’ equity as a reduction of additional paid-in capital. Transaction costs related to asset acquisitions were capitalized as part of the acquisition. As of September 30, 2019, approximately $0.5 million of offering and other costs are owed to an affiliate of the Company’s initial sole shareholder.

Investments in Real Estate

Upon the acquisition of real estate, the purchase price is allocated based upon the fair value of the assets acquired and liabilities assumed. The allocation of the purchase price to the fair value of the tangible assets of an acquired property is derived by valuing the property as if it were vacant. All real estate acquisitions in the periods presented qualified as asset acquisitions and, as such, acquisition-related fees and acquisition-related expenses related to these asset acquisitions were capitalized and allocated to tangible and intangible assets and liabilities.

Investments in real estate generally include land, buildings, tenant improvements and identified intangible assets, such as in-place lease intangibles and above or below-market lease intangibles. Direct and certain indirect costs clearly associated with the development, construction, leasing or expansion of real estate assets are capitalized as a cost of the property. Repairs and maintenance costs are expensed as incurred. Depreciation on buildings generally is provided on a straight-line basis over 40 years. Tenant improvements are depreciated over the shorter of their estimated useful lives or the term of the related lease. The acquired in-place lease values are amortized to expense over the average remaining non-cancellable term of the respective in-place leases. The acquired above or below-market lease intangibles are amortized to rent income over the applicable lease term, inclusive of any option periods for below-market leases.

The carrying value of real estate investments and related intangible assets is 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. For the three and nine months ended September 30, 2019 and 2018, no impairment loss was recorded.

During the three months ended September 30, 2019, the Company acquired eighteen properties for a purchase price of $11.1 million, inclusive of acquisition costs of $0.1 million. During the three months ended June 30, 2019, the Company acquired the Acquisition Properties in connection with the IPO for a purchase price of $27.3 million, inclusive of acquisition costs of $0.4 million. During the three months ended March 31, 2019, the Predecessor acquired one property for a purchase price of $645,120, inclusive of acquisition costs of $10,120. The purchase prices 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 was allocated as follows:

	Three months ended
	September 30, 2019			June 30, 2019			March 31, 2019
Land	$	2,619,719		$	6,789,589		$	179,202
Building and improvements		8,301,678			18,774,918			456,550
Tenant improvements		190,343			259,640			18,166
In-place lease intangibles		982,974			2,227,870			69,504
Above-market leases		-			6,338			-
Below market leases		(1,024,644	)		(754,300	)		(78,302	)
Total	$	11,070,070		$	27,304,055		$	645,120

During the nine months ended September 30, 2018, the Predecessor acquired seven properties for an aggregate purchase price of $1,334,591, inclusive of acquisition costs of $19,598. The purchase price was 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 was allocated as follows:

	Nine months ended
	September 30, 2018
Land	$	502,667
Building and improvements		825,811
Tenant improvements		29,029
In-place lease intangibles		171,713
Above-market leases		19,602
Below market leases		(214,231	)
Total	$	1,334,591

Cash and Restricted Cash

Cash and cash equivalents include cash and highly liquid investment securities with maturities at acquisition of three months or less. Restricted cash is presented as escrows and reserves in the accompanying consolidated and combined consolidated balance sheets. Cash and restricted cash consist of the following:

	September 30, 2019 (Unaudited)		December 31, 2018
Cash	$	10,969,557	$	262,926
Restricted cash:
Maintenance reserve		602,306		598,949
ESPP reserve		7,894		-
Total cash and restricted cash	$	11,579,757	$	861,875

Fair Value of Financial Instruments

The following disclosure of estimated fair value was determined by management using available market information and appropriate valuation methodologies. However, considerable judgment is necessary to interpret market data and develop estimated fair value. Accordingly, the estimates presented herein are not necessarily indicative of the amounts the Company could realize on disposition of the assets and liabilities at September 30, 2019 and December 31, 2018. The use of different market assumptions and/or estimation methodologies may have a material effect on the estimated fair value amounts. Cash, escrows and deposits, receivables, prepaid expenses, accounts payable and accrued expenses and due to affiliates are carried at amounts which reasonably approximate their fair values as of September 30, 2019 and December 31, 2018 due to their short maturities. The fair value of the Company’s borrowings under its senior revolving credit facility approximates carrying value. The fair value of the Company’s secured borrowings aggregated approximately $3,208,680 and $33,586,000, as compared to the principal balance of $3,272,911 and $35,019,149 as of September 30, 2019 and December 31, 2018, respectively. The fair value of the Company’s debt was categorized as a level 3 basis (as provided by ASC 820, Fair Value Measurements and Disclosures). The fair value was estimated using a discounted cash flow analysis valuation based on the borrowing rates currently available to the Company for loans with similar terms and maturities. The fair value of the mortgage debt was determined by discounting the future contractual interest and principal payments by a market rate.

Disclosure about fair value of assets and liabilities is based on pertinent information available to management as of September 30, 2019 and December 31, 2018, respectively. 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 September 30, 2019 and current estimates of fair value may differ significantly from the amounts presented herein.

Revenue Recognition

The Company has operating lease agreements with tenants, some of which contain provisions for future rent 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 tenant reimbursement revenue.

Fee and other income primarily consist of property management fees. These 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.

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 receipt of insurance proceeds is deemed probable. Any amount of insurance recovery in excess of the amount of the losses incurred is considered a gain contingency and is not recorded in fee and other income until the proceeds are received. 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 proceeds are received.

Income Taxes

UPH was subject to federal income tax and state franchise taxes in jurisdictions where it conducts business. See Note 8. Income Taxes for a discussion of the treatment of the deferred tax assets and liabilities in connection with the IPO.

Income taxes or credits resulting from earnings or losses for the LLCs, the limited partnership and NPM were payable by or accrue to the benefit of the members/partners/shareholders of such entities. No provision has been made for income taxes for these pass-through entities in the combined consolidated financial statements.

For periods subsequent to the completion of the IPO and the Formation Transactions, PRM is subject to federal, state and local corporate income taxes to the extent there is taxable income.

Noncontrolling Interests

Noncontrolling interests in the Company represent common units of limited partnership interest of the Operating Partnership (“Common Units”) held by the Predecessor’s prior investors and long term incentive units of the Operating Partnership (“LTIP Units”) held by the Company’s CEO. Upon completion of the IPO and the Formation Transactions, the Operating Partnership issued 1,333,112 Common Units to the Predecessor’s prior investors as partial consideration for the contribution of their interest in the Predecessor to the Operating Partnership and 114,706 LTIP Units to the Company’s CEO. During the three months ended September 30, 2019, the Company issued 5,298 LTIP Units to an employee.

Dividends

On June 26, 2019, the board of directors of the Company approved and the Company declared a pro-rated cash dividend of $0.063 per share and common unit for the period from May 17, 2019, the closing date of the IPO, to September 30, 2019. The dividend was paid on July 31, 2019 to stockholders and common unitholders of record as of the close of business on July 9, 2019 consisting of $0.3 million in dividends to stockholders and $0.1 million to common unitholders. On November 5, 2019, the board of directors of the Company approved and the Company declared a cash dividend of $0.14 per share and common unit for the quarter ended September 30, 2019. The dividend will be paid on December 2, 2019 to stockholders and common unitholders of record as of the close of business on November 15, 2019 consisting of $0.7 million in dividends to stockholders and $0.2 million to common unitholders.

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. The estimated grant date fair value of restricted stock units is amortized over their respective vesting periods. See Note 11. Stockholder’s Equity for further details.

Earnings per Share

The Company calculates net income (loss) per share based upon the weighted average shares outstanding during the period beginning May 17, 2019. Diluted earnings per share is calculated after giving effect to all potential dilutive shares outstanding during the period. There were 1,453,116 potentially dilutive shares outstanding related to the issuance of Common Units and LTIP Units held by noncontrolling interests as of September 30, 2019.

Reclassifications

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

Accounting Standards Adopted in 2019

In May 2014, the Financial Accounting Standards Board issued Accounting Standards Update (“ASU”) No. 2014-09, Revenue from Contracts with Customers (“ASU 2014-09”) and established Accounting Standards Codification (“ASC”) Topic 606. ASU 2014-09, as amended by subsequent ASUs on the topic, establishes a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and supersedes most of the existing revenue recognition guidance.

This standard is effective for interim and annual reporting periods that begin on or after December 15, 2018 as a result of the Company’s status as an emerging growth company. The Company and the Predecessor adopted ASU 2014-09 on January 1, 2019 using the modified retrospective method however, there was no cumulative effect required to be recognized in retained earnings at the date of application. Substantially all of the Company’s revenue is derived from its tenant leases and therefore falls outside the scope of this guidance. With respect to its fee-based revenue, the Company earns monthly base management fees subject to the terms of the contractual agreements with entities that are affiliated with the Company for the day-to-day operations and administration of its managed properties. These services are provided in exchange for monthly management fees, which are based on a percentage of revenues collected from post offices owned by entities that are affiliated with the Company. The Company determined that there is no change to revenue recognition for base management fees as the underlying services are considered to be individual performance obligations composed of a series of distinct services satisfied over time, for which revenue is recognized monthly as earned over the life of the management agreement as services are provided. The total amount of consideration from the contracts is variable as it is based on monthly revenues, which are influenced by multiple factors, some of which are outside the Company’s control. Therefore, the Company recognizes the revenue at the end of each month once the uncertainty is resolved. Due to the standardized terms of the management agreements, the Company accounts for all management agreements in a similar, consistent manner. Therefore, no disaggregated information relating to management agreements is presented.

Future Application of Accounting Standards

In February 2016, the FASB issued ASU No. 2016-02, Leases (“ASU 2016-02”). ASU 2016-02 outlines a new model for accounting by lessees, whereby all leases, existing and new, with lease terms greater than one year will be recognized on the balance sheet. For lessors, however, the accounting remains largely unchanged from the current model, changes have been made to align certain lessor and lessee accounting guidance and the key aspects of the lessor accounting model with new revenue recognition standard discussed above. Under the new guidance, contract consideration will be allocated to its lease components and non-lease components (such as maintenance). For the Company as a lessor, any non-lease components will be accounted for under ASC Topic 606, Revenue from Contracts with Customers, unless the Company elects a lessor practical expedient to not separate the non-lease components from the associated lease component (see discussion below). The new guidance also includes a definition of initial direct costs that is narrower than the prior definition in current GAAP (Topic 840, Leases). This will result in a change to the accounting for the Company’s internal leasing costs, which will be expensed as incurred, as opposed to being capitalized and deferred. Commissions subsequent to successful lease execution will continue to be capitalized.

ASU 2016-02 initially provided for one retrospective transition method; however, a second transition method was later added with ASU 2018-11 as described below. To ease the transition, the new lease accounting guidance permits companies to utilize certain practical expedients in their implementation of the new standard:

● A package of three practical expedients that must be elected together for all leases and includes: (i) not reassessing expired or existing contracts as to whether they are or contain leases; (ii) not reassessing lease classification of existing leases and (iii) not reassessing the amount of capitalized initial direct costs for existing leases;

● ASU 2016-02 also includes a practical expedient to use hindsight in determining the lease term or assessing purchase options for existing leases and in assessing impairment of right of use assets;

● ASU 2018-01, Land Easements Practical Expedient for Transition to Topic 842 added a transition practical expedient to not reassess existing or expired land easement agreements not previously accounted for as leases; and

● A new practical expedient under ASU 2018-11, described below.

In July 2018, the FASB issued ASU No. 2018-10, Codification Improvements to Topic 842, Leases. These amendments provide minor clarifications and corrections to ASU 2016-02, Leases (Topic 842). In July 2018, the FASB issued ASU No. 2018-11, Leases (Topic 842): Targeted Improvements. The amendments in this Update provide entities with an additional optional transition method to adopt ASU 2016-02. Under this new transition method, an entity may apply the new leases standard at the adoption date instead of the earliest comparative period presented in its financial statements and recognizes a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption. Consequently, an entity’s reporting under this additional transition method for the comparative periods presented in the financial statements prior to the adoption date of the new leases standard will continue to be in accordance with current GAAP (Topic 840, Leases). The amendments in ASU 2018-11 also provide lessors with a practical expedient, by class of underlying asset, to not separate non-lease components from the associated lease component and, instead, to account for those components as a single component if the non-lease components otherwise would be accounted for under the new revenue guidance (“Topic 606”). To elect the practical expedient, the timing and pattern of transfer of the lease and non-lease components must be the same and the lease component must meet the criteria to be classified as an operating lease if accounted for separately. If these criteria are met, the single component will be accounted for under either under Topic 842 or Topic 606 depending on which component(s) are predominant. The lessor practical expedient to not separate non-lease components from the associated component must be elected for all existing and new leases.

As lessor, the Company expects that post-adoption substantially all existing leases will have no change in the timing of revenue recognition until their expiration or termination. The Company expects to elect the package of practical expedients and the lessor practical expedient to not separate non-lease components such as maintenance from the associated lease for all existing and new leases and to account for the combined component as a single lease component. The timing of revenue recognition is expected to be the same for the majority of the Company’s new leases as compared to similar existing leases; however, certain categories of new leases could have different revenue recognition patterns as compared to similar existing leases. As lessee, the Company expects to record a right of use asset and related liability for the office lease disclosed in Note 9. Related Party Transactions.

In December 2018, the FASB issued ASU 2018-20 Leases (Topic 842), Narrow-Scope Improvements for Lessors. This ASU modifies ASU No. 2016-02 to permit lessors, as an accounting policy election, not to evaluate whether certain sales taxes and other similar taxes are lessor costs or lessee costs. Instead, those lessors will account for those costs as if they are lessee costs. Consequently, a lessor making this election will exclude from the consideration in the contract and from variable payments not included in the consideration in the contract all collections from lessees of taxes within the scope of the election and will provide certain disclosures (includes sales, use, value added, and some excise taxes and excludes real estate taxes). The Company has elected not to evaluate whether the aforementioned costs are lessor or lessee costs. ASU 2018-20 also provides that certain lessor costs require lessors to exclude from variable payments, and therefore revenue, specifically lessor costs paid by lessees directly to third parties. The amendments also require lessors to account for costs excluded from the consideration of a contract that are paid by the lessor and reimbursed by the lessee as variable payments. A lessor will record those reimbursed costs as revenue.

Topic 842 will be effective for the Company on January 1, 2021 as a result of its classification as an emerging growth company. The Company continues to evaluate the FASB’s activities related to the new leasing standard and the potential impact on its financial results, policies and disclosures upon adoption, including the accounting for costs which may be paid by the lessee directly to a third party, such as real estate taxes.

In December 2018, the FASB issued ASU No. 2018-20, Leases — Narrow-Scope Improvements for Lessors which provides guidance to Topic 842 in requiring lessors to recognize certain variable payment amounts in profit or loss in the period when the changes in facts and circumstances on which the variable payment is based occur. The Company is currently assessing the impact this guidance will have on its consolidated financial statements.

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

XML

Document and Entity Information - shares	9 Months Ended
	Sep. 30, 2019	Nov. 11, 2019
Document And Entity Information
Entity Registrant Name	Postal Realty Trust, Inc.
Entity Central Index Key	0001759774
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Document Type	10-Q
Document Period End Date	Sep. 30, 2019
Entity Filer Category	Non-accelerated Filer
Entity Small Business	true
Entity Ex Transition Period	false
Entity Shell Company	false
Entity Emerging Growth Company	true
Entity Current Reporting Status	Yes
Entity File Number	001-38903
Entity Interactive Data Current	Yes
Entity Incorporation State Country Code	MD
Entity Common Stock, Shares Outstanding		5,285,904
Document Fiscal Period Focus	Q3
Document Fiscal Year Focus	2019

XML

DEBT (Tables)

9 Months Ended

Sep. 30, 2019

Mortgage Loans Payable [Abstract]

Schedule of principal balances of mortgage loans payable

The following table summarizes indebtedness as of September 30, 2019 and December 31, 2018:

Borrowing	September 30, 2019		December 31, 2018
Revolving Credit Facility (1)	$	17,000,000	$	-
Vision Bank		1,538,330		15,636,243
Atlanta Postal Credit Union		-		17,313,481
First Oklahoma Bank		381,391		389,599
Vision Bank – 2018		908,190		936,750
Seller Financing (2)		445,000		-
First Oklahoma Bank – 2018		-		743,076
Total debt	$	20,272,911	$	35,019,149

(1) On September 27, 2019, the Company entered into a $100 million Senior Revolving Credit Facility (“Facility”), which includes an accordion feature that will permit the Company to borrow up to $200 million, subject to customary terms and conditions. The Facility matures in September 2023. Borrowings under the Facility carry an interest rate of either a base rate plus a range of 70 to 140 basis points or LIBOR plus a range of 170 to 240 basis points, each depending on a consolidated leverage ratio. As of September 30, 2019, the Company had $17 million drawn under the Facility and the Facility bore interest at LIBOR (at September 30, 2019, the one-month LIBOR rate was 2.02%) plus 170 bps. In addition, the Company will pay, for the period through and including the calendar quarter ending March 31, 2020, an unused facility fee on the revolving commitments under the Facility of .75% per annum for the first $100 million and .25% per annum for the portion of revolving commitments exceeding $100 million, and for the period thereafter, an unused facility fee of .25% per annum for the aggregate unused revolving commitments, with both periods utilizing calculations of daily unused commitments under the Facility. The Company’s ability to borrow under the Facility is subject to ongoing compliance with a number of customary affirmative and negative covenants. As of September 30, 2019, the Company was in compliance with the Facility’s debt covenants.

(2) 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 $105,661 with the first payable on January 2, 2021 based on a 6% interest rate per annum through January 2, 2025.

Schedule of Principal payments of mortgage loans payable

Principal payments on debt through maturity are as follows:

Year Ending December 31,	Amount
2019 – Remaining	$	27,409
2020		109,182
2021		191,562
2022		196,553
2023		17,204,951
Thereafter		2,543,254
		20,272,911
Less: Deferred financing costs, net		35,584
Total	$	20,237,327

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies)

9 Months Ended

Sep. 30, 2019

Accounting Policies [Abstract]

Basis of Presentation

Basis of Presentation

The accompanying consolidated and combined consolidated financial statements of the Company include the financial position and results of operations of the Company, the Operating Partnership and its wholly owned subsidiaries. The Predecessor represents a combination of certain entities holding interests in real estate that were commonly controlled prior to the Formation Transactions. Due to their common control, the financial statements of the separate entities which own the properties and the management company are presented on a combined basis. The effects of all significant intercompany balances and transactions have been eliminated.

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

A non-controlling interest is defined as the portion of the equity in an entity not attributable, directly or indirectly, to the Company. Non-controlling interests are required to be presented as a separate component of equity in the consolidated and combined consolidated balance sheets. Accordingly, the presentation of net income is modified to present the income attributed to controlling and non-controlling interests.

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

The information furnished in the accompanying consolidated and combined consolidated financial statements reflects all adjustments that, in the opinion of management, are necessary for a fair presentation of the aforementioned consolidated and combined consolidated financial statements for the interim periods. Operating results for the three and nine months ended September 30, 2019 are not necessarily indicative of the results that may be expected for the year ending December 31, 2019. These interim financial statements should be read in conjunction with, and follow the same policies and procedures as outlined in the audited combined consolidated financial statements for the year ended December 31, 2018, included in the Company’s final prospectus dated May 14, 2019.

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 and disclosure of commitments and contingencies at the date of the consolidated and combined consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ materially from these estimates.

Offering and Other Costs

Offering and Other Costs

Certain of the costs related to the IPO and the Formation Transactions paid by an affiliate of the Company’s initial sole shareholder were reimbursed by the Company from the proceeds of the IPO. Offering costs were recorded in stockholders’ equity as a reduction of additional paid-in capital. Transaction costs related to asset acquisitions were capitalized as part of the acquisition. As of September 30, 2019, approximately $0.5 million of offering and other costs are owed to an affiliate of the Company’s initial sole shareholder.

Investments in Real Estate

Investments in Real Estate

Upon the acquisition of real estate, the purchase price is allocated based upon the fair value of the assets acquired and liabilities assumed. The allocation of the purchase price to the fair value of the tangible assets of an acquired property is derived by valuing the property as if it were vacant. All real estate acquisitions in the periods presented qualified as asset acquisitions and, as such, acquisition-related fees and acquisition-related expenses related to these asset acquisitions were capitalized and allocated to tangible and intangible assets and liabilities.

Investments in real estate generally include land, buildings, tenant improvements and identified intangible assets, such as in-place lease intangibles and above or below-market lease intangibles. Direct and certain indirect costs clearly associated with the development, construction, leasing or expansion of real estate assets are capitalized as a cost of the property. Repairs and maintenance costs are expensed as incurred. Depreciation on buildings generally is provided on a straight-line basis over 40 years. Tenant improvements are depreciated over the shorter of their estimated useful lives or the term of the related lease. The acquired in-place lease values are amortized to expense over the average remaining non-cancellable term of the respective in-place leases. The acquired above or below-market lease intangibles are amortized to rent income over the applicable lease term, inclusive of any option periods for below-market leases.

The carrying value of real estate investments and related intangible assets is 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. For the three and nine months ended September 30, 2019 and 2018, no impairment loss was recorded.

During the three months ended September 30, 2019, the Company acquired eighteen properties for a purchase price of $11.1 million, inclusive of acquisition costs of $0.1 million. During the three months ended June 30, 2019, the Company acquired the Acquisition Properties in connection with the IPO for a purchase price of $27.3 million, inclusive of acquisition costs of $0.4 million. During the three months ended March 31, 2019, the Predecessor acquired one property for a purchase price of $645,120, inclusive of acquisition costs of $10,120. The purchase prices 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 was allocated as follows:

	Three months ended
	September 30, 2019			June 30, 2019			March 31, 2019
Land	$	2,619,719		$	6,789,589		$	179,202
Building and improvements		8,301,678			18,774,918			456,550
Tenant improvements		190,343			259,640			18,166
In-place lease intangibles		982,974			2,227,870			69,504
Above-market leases		-			6,338			-
Below market leases		(1,024,644	)		(754,300	)		(78,302	)
Total	$	11,070,070		$	27,304,055		$	645,120

During the nine months ended September 30, 2018, the Predecessor acquired seven properties for an aggregate purchase price of $1,334,591, inclusive of acquisition costs of $19,598. The purchase price was 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 was allocated as follows:

	Nine months ended
	September 30, 2018
Land	$	502,667
Building and improvements		825,811
Tenant improvements		29,029
In-place lease intangibles		171,713
Above-market leases		19,602
Below market leases		(214,231	)
Total	$	1,334,591

Cash and Restricted Cash

Cash and Restricted Cash

Cash and cash equivalents include cash and highly liquid investment securities with maturities at acquisition of three months or less. Restricted cash is presented as escrows and reserves in the accompanying consolidated and combined consolidated balance sheets. Cash and restricted cash consist of the following:

	September 30, 2019 (Unaudited)		December 31, 2018
Cash	$	10,969,557	$	262,926
Restricted cash:
Maintenance reserve		602,306		598,949
ESPP reserve		7,894		-
Total cash and restricted cash	$	11,579,757	$	861,875

Fair Value of Financial Instruments

Fair Value of Financial Instruments

The following disclosure of estimated fair value was determined by management using available market information and appropriate valuation methodologies. However, considerable judgment is necessary to interpret market data and develop estimated fair value. Accordingly, the estimates presented herein are not necessarily indicative of the amounts the Company could realize on disposition of the assets and liabilities at September 30, 2019 and December 31, 2018. The use of different market assumptions and/or estimation methodologies may have a material effect on the estimated fair value amounts. Cash, escrows and deposits, receivables, prepaid expenses, accounts payable and accrued expenses and due to affiliates are carried at amounts which reasonably approximate their fair values as of September 30, 2019 and December 31, 2018 due to their short maturities. The fair value of the Company’s borrowings under its senior revolving credit facility approximates carrying value. The fair value of the Company’s secured borrowings aggregated approximately $3,208,680 and $33,586,000, as compared to the principal balance of $3,272,911 and $35,019,149 as of September 30, 2019 and December 31, 2018, respectively. The fair value of the Company’s debt was categorized as a level 3 basis (as provided by ASC 820, Fair Value Measurements and Disclosures). The fair value was estimated using a discounted cash flow analysis valuation based on the borrowing rates currently available to the Company for loans with similar terms and maturities. The fair value of the mortgage debt was determined by discounting the future contractual interest and principal payments by a market rate.

Disclosure about fair value of assets and liabilities is based on pertinent information available to management as of September 30, 2019 and December 31, 2018, respectively. 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 September 30, 2019 and current estimates of fair value may differ significantly from the amounts presented herein.

Revenue recognition

Revenue Recognition

The Company has operating lease agreements with tenants, some of which contain provisions for future rent 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 tenant reimbursement revenue.

Fee and other income primarily consist of property management fees. These 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.

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 receipt of insurance proceeds is deemed probable. Any amount of insurance recovery in excess of the amount of the losses incurred is considered a gain contingency and is not recorded in fee and other income until the proceeds are received. 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 proceeds are received.

Income Taxes

Income Taxes

UPH was subject to federal income tax and state franchise taxes in jurisdictions where it conducts business. See Note 8. Income Taxes for a discussion of the treatment of the deferred tax assets and liabilities in connection with the IPO.

Income taxes or credits resulting from earnings or losses for the LLCs, the limited partnership and NPM were payable by or accrue to the benefit of the members/partners/shareholders of such entities. No provision has been made for income taxes for these pass-through entities in the combined consolidated financial statements.

For periods subsequent to the completion of the IPO and the Formation Transactions, PRM is subject to federal, state and local corporate income taxes to the extent there is taxable income.

Noncontrolling Interests

Noncontrolling Interests

Noncontrolling interests in the Company represent common units of limited partnership interest of the Operating Partnership (“Common Units”) held by the Predecessor’s prior investors and long term incentive units of the Operating Partnership (“LTIP Units”) held by the Company’s CEO. Upon completion of the IPO and the Formation Transactions, the Operating Partnership issued 1,333,112 Common Units to the Predecessor’s prior investors as partial consideration for the contribution of their interest in the Predecessor to the Operating Partnership and 114,706 LTIP Units to the Company’s CEO. During the three months ended September 30, 2019, the Company issued 5,298 LTIP Units to an employee.

Dividends

Dividends

On June 26, 2019, the board of directors of the Company approved and the Company declared a pro-rated cash dividend of $0.063 per share and common unit for the period from May 17, 2019, the closing date of the IPO, to September 30, 2019. The dividend was paid on July 31, 2019 to stockholders and common unitholders of record as of the close of business on July 9, 2019 consisting of $0.3 million in dividends to stockholders and $0.1 million to common unitholders. On November 5, 2019, the board of directors of the Company approved and the Company declared a cash dividend of $0.14 per share and common unit for the quarter ended September 30, 2019. The dividend will be paid on December 2, 2019 to stockholders and common unitholders of record as of the close of business on November 15, 2019 consisting of $0.7 million in dividends to stockholders and $0.2 million to common unitholders.

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. The estimated grant date fair value of restricted stock units is amortized over their respective vesting periods. See Note 11. Stockholder’s Equity for further details.

Earnings per Share

Earnings per Share

The Company calculates net income (loss) per share based upon the weighted average shares outstanding during the period beginning May 17, 2019. Diluted earnings per share is calculated after giving effect to all potential dilutive shares outstanding during the period. There were 1,453,116 potentially dilutive shares outstanding related to the issuance of Common Units and LTIP Units held by noncontrolling interests as of September 30, 2019.

Reclassifications

Reclassifications

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

Accounting Standards Adopted in 2019

Accounting Standards Adopted in 2019

In May 2014, the Financial Accounting Standards Board issued Accounting Standards Update (“ASU”) No. 2014-09, Revenue from Contracts with Customers (“ASU 2014-09”) and established Accounting Standards Codification (“ASC”) Topic 606. ASU 2014-09, as amended by subsequent ASUs on the topic, establishes a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and supersedes most of the existing revenue recognition guidance.

This standard is effective for interim and annual reporting periods that begin on or after December 15, 2018 as a result of the Company’s status as an emerging growth company. The Company and the Predecessor adopted ASU 2014-09 on January 1, 2019 using the modified retrospective method however, there was no cumulative effect required to be recognized in retained earnings at the date of application. Substantially all of the Company’s revenue is derived from its tenant leases and therefore falls outside the scope of this guidance. With respect to its fee-based revenue, the Company earns monthly base management fees subject to the terms of the contractual agreements with entities that are affiliated with the Company for the day-to-day operations and administration of its managed properties. These services are provided in exchange for monthly management fees, which are based on a percentage of revenues collected from post offices owned by entities that are affiliated with the Company. The Company determined that there is no change to revenue recognition for base management fees as the underlying services are considered to be individual performance obligations composed of a series of distinct services satisfied over time, for which revenue is recognized monthly as earned over the life of the management agreement as services are provided. The total amount of consideration from the contracts is variable as it is based on monthly revenues, which are influenced by multiple factors, some of which are outside the Company’s control. Therefore, the Company recognizes the revenue at the end of each month once the uncertainty is resolved. Due to the standardized terms of the management agreements, the Company accounts for all management agreements in a similar, consistent manner. Therefore, no disaggregated information relating to management agreements is presented.

Future Application of Accounting Standards

Future Application of Accounting Standards

In February 2016, the FASB issued ASU No. 2016-02, Leases (“ASU 2016-02”). ASU 2016-02 outlines a new model for accounting by lessees, whereby all leases, existing and new, with lease terms greater than one year will be recognized on the balance sheet. For lessors, however, the accounting remains largely unchanged from the current model, changes have been made to align certain lessor and lessee accounting guidance and the key aspects of the lessor accounting model with new revenue recognition standard discussed above. Under the new guidance, contract consideration will be allocated to its lease components and non-lease components (such as maintenance). For the Company as a lessor, any non-lease components will be accounted for under ASC Topic 606, Revenue from Contracts with Customers, unless the Company elects a lessor practical expedient to not separate the non-lease components from the associated lease component (see discussion below). The new guidance also includes a definition of initial direct costs that is narrower than the prior definition in current GAAP (Topic 840, Leases). This will result in a change to the accounting for the Company’s internal leasing costs, which will be expensed as incurred, as opposed to being capitalized and deferred. Commissions subsequent to successful lease execution will continue to be capitalized.

ASU 2016-02 initially provided for one retrospective transition method; however, a second transition method was later added with ASU 2018-11 as described below. To ease the transition, the new lease accounting guidance permits companies to utilize certain practical expedients in their implementation of the new standard:

● A package of three practical expedients that must be elected together for all leases and includes: (i) not reassessing expired or existing contracts as to whether they are or contain leases; (ii) not reassessing lease classification of existing leases and (iii) not reassessing the amount of capitalized initial direct costs for existing leases;

● ASU 2016-02 also includes a practical expedient to use hindsight in determining the lease term or assessing purchase options for existing leases and in assessing impairment of right of use assets;

● ASU 2018-01, Land Easements Practical Expedient for Transition to Topic 842 added a transition practical expedient to not reassess existing or expired land easement agreements not previously accounted for as leases; and

● A new practical expedient under ASU 2018-11, described below.

In July 2018, the FASB issued ASU No. 2018-10, Codification Improvements to Topic 842, Leases. These amendments provide minor clarifications and corrections to ASU 2016-02, Leases (Topic 842). In July 2018, the FASB issued ASU No. 2018-11, Leases (Topic 842): Targeted Improvements. The amendments in this Update provide entities with an additional optional transition method to adopt ASU 2016-02. Under this new transition method, an entity may apply the new leases standard at the adoption date instead of the earliest comparative period presented in its financial statements and recognizes a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption. Consequently, an entity’s reporting under this additional transition method for the comparative periods presented in the financial statements prior to the adoption date of the new leases standard will continue to be in accordance with current GAAP (Topic 840, Leases). The amendments in ASU 2018-11 also provide lessors with a practical expedient, by class of underlying asset, to not separate non-lease components from the associated lease component and, instead, to account for those components as a single component if the non-lease components otherwise would be accounted for under the new revenue guidance (“Topic 606”). To elect the practical expedient, the timing and pattern of transfer of the lease and non-lease components must be the same and the lease component must meet the criteria to be classified as an operating lease if accounted for separately. If these criteria are met, the single component will be accounted for under either under Topic 842 or Topic 606 depending on which component(s) are predominant. The lessor practical expedient to not separate non-lease components from the associated component must be elected for all existing and new leases.

As lessor, the Company expects that post-adoption substantially all existing leases will have no change in the timing of revenue recognition until their expiration or termination. The Company expects to elect the package of practical expedients and the lessor practical expedient to not separate non-lease components such as maintenance from the associated lease for all existing and new leases and to account for the combined component as a single lease component. The timing of revenue recognition is expected to be the same for the majority of the Company’s new leases as compared to similar existing leases; however, certain categories of new leases could have different revenue recognition patterns as compared to similar existing leases. As lessee, the Company expects to record a right of use asset and related liability for the office lease disclosed in Note 9. Related Party Transactions.

In December 2018, the FASB issued ASU 2018-20 Leases (Topic 842), Narrow-Scope Improvements for Lessors. This ASU modifies ASU No. 2016-02 to permit lessors, as an accounting policy election, not to evaluate whether certain sales taxes and other similar taxes are lessor costs or lessee costs. Instead, those lessors will account for those costs as if they are lessee costs. Consequently, a lessor making this election will exclude from the consideration in the contract and from variable payments not included in the consideration in the contract all collections from lessees of taxes within the scope of the election and will provide certain disclosures (includes sales, use, value added, and some excise taxes and excludes real estate taxes). The Company has elected not to evaluate whether the aforementioned costs are lessor or lessee costs. ASU 2018-20 also provides that certain lessor costs require lessors to exclude from variable payments, and therefore revenue, specifically lessor costs paid by lessees directly to third parties. The amendments also require lessors to account for costs excluded from the consideration of a contract that are paid by the lessor and reimbursed by the lessee as variable payments. A lessor will record those reimbursed costs as revenue.

Topic 842 will be effective for the Company on January 1, 2021 as a result of its classification as an emerging growth company. The Company continues to evaluate the FASB’s activities related to the new leasing standard and the potential impact on its financial results, policies and disclosures upon adoption, including the accounting for costs which may be paid by the lessee directly to a third party, such as real estate taxes.

In December 2018, the FASB issued ASU No. 2018-20, Leases — Narrow-Scope Improvements for Lessors which provides guidance to Topic 842 in requiring lessors to recognize certain variable payment amounts in profit or loss in the period when the changes in facts and circumstances on which the variable payment is based occur. The Company is currently assessing the impact this guidance will have on its consolidated financial statements.

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

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Consolidated and Combined Consolidated Statements of Changes in Equity (Deficit) (Unaudited) - USD ($)	Common Stock Predecessor	Common Stock	Additional Paid-In Capital Predecessor	Additional Paid-In Capital	Retained Earnings / Accumulated Deficit Predecessor	Retained Earnings / Accumulated Deficit	Member's Equity (Deficit) Predecessor	Member's Equity (Deficit)	Total stockholder's equity Predecessor	Total stockholder's equity	Operating Partnership unitholders' noncontrolling interests Predecessor	Operating Partnership unitholders' noncontrolling interests	Noncontrolling interest in properties Predecessor	Noncontrolling interest in properties	Predecessor	Total
Beginning Balance at Dec. 31, 2017	$ 4,000,200		$ 3,650,309		$ (10,693,356)		$ (7,012,369)		$ (10,055,216)				$ 44,577		$ (10,010,639)
Beginning Balance, Shares at Dec. 31, 2017	1,200
Capital contributions			135,577				1,046,284		1,181,861				2,651		1,184,512
Distributions and dividends			(100,245)				(1,904,107)		(2,004,352)				(2,651)		(2,007,003)
Net income (loss)					(228,940)		319,581		90,641				3,822		94,463
Ending Balance at Mar. 31, 2018	$ 4,000,200		3,685,641		(10,922,296)		(7,550,611)		(10,787,066)				48,399		(10,738,667)
Ending Balance, Shares at Mar. 31, 2018	1,200
Beginning Balance at Dec. 31, 2017	$ 4,000,200		3,650,309		(10,693,356)		(7,012,369)		(10,055,216)				44,577		(10,010,639)
Beginning Balance, Shares at Dec. 31, 2017	1,200
Distributions and dividends															(4,076,535)
Net income (loss)															917,769
Ending Balance at Sep. 30, 2018	$ 4,000,200		3,466,603		(10,845,928)		(2,853,117)		(6,232,242)				54,039		(6,178,203)
Ending Balance, Shares at Sep. 30, 2018	1,200
Beginning Balance at Mar. 31, 2018	$ 4,000,200		3,685,641		(10,922,296)		(7,550,611)		(10,787,066)				48,399		(10,738,667)
Beginning Balance, Shares at Mar. 31, 2018	1,200
Capital contributions			199,003				5,038,920		5,237,923				1,854		5,239,777
Distributions and dividends			(200,142)				(780,516)		(980,658)				(1,854)		(982,512)
Net income (loss)					(51,721)		369,999		318,278				2,811		321,089
Ending Balance at Jun. 30, 2018	$ 4,000,200		3,684,502		(10,974,017)		(2,922,208)		(6,211,523)				51,210		(6,160,313)
Ending Balance, Shares at Jun. 30, 2018
Capital contributions			10,601				549,680		560,281				6,632		566,913
Distributions and dividends			(228,500)				(851,888)		(1,080,388)				(6,632)		(1,087,020)
Net income (loss)					128,089		371,299		499,388				2,829		502,217
Ending Balance at Sep. 30, 2018	$ 4,000,200		3,466,603		(10,845,928)		(2,853,117)		(6,232,242)				54,039		(6,178,203)
Ending Balance, Shares at Sep. 30, 2018	1,200
Beginning Balance at Dec. 31, 2018	$ 4,000,200		3,441,493		(11,003,876)		(2,095,823)		(5,658,006)				44,593		(5,613,413)
Beginning Balance, Shares at Dec. 31, 2018	1,200
Capital contributions			397,121				1,377,758		1,774,879						1,774,879
Distributions and dividends			(150,000)				(1,067,515)		(1,217,515)				(521)		(1,218,036)
Net income (loss)					(173,554)		427,787		254,233				2,843		257,076
Ending Balance at Mar. 31, 2019	$ 4,000,200		3,688,614		(11,177,430)		(1,357,793)		(4,846,409)				46,915		(4,799,494)
Ending Balance, Shares at Mar. 31, 2019	1,200
Beginning Balance at Dec. 31, 2018	$ 4,000,200		3,441,493		(11,003,876)		(2,095,823)		(5,658,006)				44,593		(5,613,413)
Beginning Balance, Shares at Dec. 31, 2018	1,200
Net income (loss)															467,750
Ending Balance at May. 16, 2019	$ 4,000,200	$ 4,000,200	3,139,423	$ 3,139,423	(11,174,220)	$ (11,174,220)	(1,168,623)	$ (1,168,623)	(5,203,220)	$ (5,203,220)			42,741	$ 42,741	(5,160,479)	$ (5,160,479)
Ending Balance, Shares at May. 16, 2019	1,200	1,200
Beginning Balance at Dec. 31, 2018	$ 4,000,200		3,441,493		(11,003,876)		(2,095,823)		(5,658,006)				44,593		(5,613,413)
Beginning Balance, Shares at Dec. 31, 2018	1,200
Distributions and dividends																(2,508,962)
Net income (loss)																(423,035)
Ending Balance at Sep. 30, 2019		$ 53,131		46,502,630		(1,034,471)				45,521,290		12,467,615				57,988,905
Ending Balance, Shares at Sep. 30, 2019		5,313,110
Beginning Balance at Mar. 31, 2019	$ 4,000,200		3,688,614		(11,177,430)		(1,357,793)		(4,846,409)				46,915		(4,799,494)
Beginning Balance, Shares at Mar. 31, 2019	1,200
Capital contributions	$ 0		0		0		293,373		293,373				0		293,373
Distributions and dividends	0		(549,191)		0		(310,174)		(859,365)				(5,667)		(865,032)
Net income (loss)	0		0		3,210		205,971		209,181				1,493		210,674
Ending Balance at May. 16, 2019	$ 4,000,200	$ 4,000,200	3,139,423	3,139,423	(11,174,220)	(11,174,220)	(1,168,623)	(1,168,623)	(5,203,220)	(5,203,220)			42,741	42,741	(5,160,479)	(5,160,479)
Ending Balance, Shares at May. 16, 2019	1,200	1,200
Net proceeds from sale of common stock		$ 45,000		64,665,261						64,710,261						64,710,261
Net proceeds from sale of common stock, shares		4,500,000
Formation transactions		$ (3,993,557)		(31,798,499)		11,174,220		1,168,623		(23,449,213)		22,662,907		(42,741)		(829,047)
Formation transactions, shares		664,264
Issuance and amortization of equity-based compensation		$ 1,485		126,755						128,240		62,103				190,343
Issuance and amortization of equity-based compensation, shares		148,529
Dividends declared						(334,706)				(334,706)		(91,213)				(425,919)
Net income (loss)						(391,796)				(391,796)		(106,672)				(498,468)
Reallocation of non-controlling interest				10,117,974						10,117,974		(10,117,974)
Ending Balance at Jun. 30, 2019		$ 53,128		46,250,914		(726,502)				45,577,540		12,409,152				57,986,692
Ending Balance, Shares at Jun. 30, 2019		5,312,793
Beginning Balance at May. 16, 2019	$ 4,000,200	$ 4,000,200	$ 3,139,423	3,139,423	$ (11,174,220)	(11,174,220)	$ (1,168,623)	(1,168,623)	$ (5,203,220)	(5,203,220)			$ 42,741	42,741	$ (5,160,479)	(5,160,479)
Beginning Balance, Shares at May. 16, 2019	1,200	1,200
Net income (loss)																(498,468)
Ending Balance at Sep. 30, 2019		$ 53,131		46,502,630		(1,034,471)				45,521,290		12,467,615				57,988,905
Ending Balance, Shares at Sep. 30, 2019		5,313,110
Beginning Balance at Jun. 30, 2019		$ 53,128		46,250,914		(726,502)				45,577,540		12,409,152				57,986,692
Beginning Balance, Shares at Jun. 30, 2019		5,312,793
Issuance and amortization of equity-based compensation		$ 3		262,181						262,184		132,346				394,530
Issuance and amortization of equity-based compensation, shares		317
Net income (loss)						(307,969)				(307,969)		(84,348)				(392,317)
Reallocation of non-controlling interest				(10,465)						(10,465)		10,465
Ending Balance at Sep. 30, 2019		$ 53,131		$ 46,502,630		$ (1,034,471)				$ 45,521,290		$ 12,467,615				$ 57,988,905
Ending Balance, Shares at Sep. 30, 2019		5,313,110

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) - USD ($)	3 Months Ended			9 Months Ended
	Sep. 30, 2019	Jun. 30, 2019	Mar. 31, 2019	Sep. 30, 2019
Total	$ 11,070,070	$ 27,304,055		$ 1,334,591
Building Improvements [Member]
Total	8,301,678	18,774,918		825,811
Tenant improvements [Member]
Total	190,343	259,640		29,029
In-place lease intangibles [Member]
Total	982,974	2,227,870		171,713
Above Market Leases [Member]
Total		6,338		19,602
Below Market Leases [Member]
Total	(1,024,644)	(754,300)		(214,231)
Land [Member]
Total	$ 2,619,719	$ 6,789,589		$ 502,667
Predecessor [Member]
Total			$ 645,120
Predecessor [Member] | Building Improvements [Member]
Total			456,550
Predecessor [Member] | Tenant improvements [Member]
Total			18,166
Predecessor [Member] | In-place lease intangibles [Member]
Total			69,504
Predecessor [Member] | Above Market Leases [Member]
Total
Predecessor [Member] | Below Market Leases [Member]
Total			(78,302)
Predecessor [Member] | Land [Member]
Total			$ 179,202

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INTANGIBLE ASSETS AND LIABILITIES (Details Narrative) - USD ($)	9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018
Amortization of in-place lease intangibles	$ 1,200,000
Amortization of acquired above market leases	7,851
Amortization of acquired below market leases	$ 334,627
Predecessor [Member]
Amortization of in-place lease intangibles		$ 600,000
Amortization of acquired above market leases		6,319
Amortization of acquired below market leases		$ 215,955

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LOANS PAYABLE - RELATED PARTY (Details) - Predecessor [Member] - USD ($)	1 Months Ended	9 Months Ended
	Jun. 30, 2018	Sep. 30, 2018
Loans Payable - Related Party (Textual)
Promissory notes	$ 3,544,215
Interest rate	1.90%
Maturity date, description	Maturing between August 1, 2036 through July 1, 2041 were assumed by an affiliate of the Predecessor and recorded as an increase in equity of the Predecessor.
Interest expense		$ 33,671

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EARNINGS PER SHARE

9 Months Ended

Sep. 30, 2019

Earnings Per Share [Abstract]

EARNINGS PER SHARE

10. EARNINGS PER SHARE

The following table shows the amounts used in computing the Company’s basic and diluted earnings per share. As of the three and nine months ended September 30, 2019, there is no dilution to earnings per share because there is a net loss.

	Three Months Ended September 30, 2019			Nine Months Ended September 30, 2019
Numerator for earnings per share – basic and diluted
Net loss attributable to common stockholders	$	(307,969	)		(699,765	)
Less: income attributable to participating securities		-			(16,715	)
Numerator for earnings per share – basic and diluted	$	(307,969	)	$	(716,480	)
Denominator for earnings per share – basic and diluted	$	5,164,264		$	5,164,264
Basic and diluted earnings per share	$	(0.06	)	$	(0.14	)

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LOANS PAYABLE - RELATED PARTY

9 Months Ended

Sep. 30, 2019

Debt Disclosure [Abstract]

LOANS PAYABLE - RELATED PARTY

6. LOANS PAYABLE – RELATED PARTY

In June 2018, pursuant to a loan modification agreement, interest-only promissory notes aggregating $3,544,215 bearing interest at 1.9% per annum, requiring interest only payments, and maturing between August 1, 2036 through July 1, 2041 were assumed by an affiliate of the Predecessor and recorded as an increase in equity of the Predecessor. Interest expense incurred for these notes was $33,671 for the nine months ended September 30, 2018.