POSTAL REALTY TRUST, INC. June 2020 Investor Presentation NYSE: - - PowerPoint PPT Presentation

POSTAL REALTY TRUST, INC.

June 2020 Investor Presentation NYSE: PSTL

Disclaimer & Forward Looking Statements

2 This presentation contains forward‐looking statements within the meaning of the federal securities laws. These statements can be identified by the fact that they do not relate strictly to historical or current facts, and are often indicated by words such as “anticipates,” “estimates,” “expects,” “intends,” “plans,” “believes” and similar expressions or future or conditional verbs such as “will,” “should,” “would,” “may” and “could.” Forward-looking statements include, among others, statements relating to the Company’s future financial performance, business prospects and strategy, anticipated financial position, liquidity and capital needs and other similar matters. These statements are based on the Company’s current expectations and assumptions about future events, which are inherently subject to uncertainties, risks and changes in circumstances that are difficult to predict. The Company’s actual results may differ materially from those expressed in, or implied by, the forward-looking statements. The Company is providing the information contained herein as

• f the date of this presentation. Except as required by applicable law, the Company does not plan to update or revise any statements contained herein, whether as a result of any new

information, future events, changed circumstances or otherwise. This presentation contains a discussion of financial measures that are not in accordance with generally accepted accounting principles in the United States (“GAAP”). Non-GAAP financial measures may exclude items that are significant in understanding and assessing the Company’s financial results, and should not be considered in isolation or as an alternative to financial measures in accordance with GAAP. In addition, the Company’s presentation of these non-GAAP financial measures may not be comparable to similarly-titled measures used by other companies.

Company Overview

15+ Year Track Record Of Institutionalizing Postal Real Estate Industry

Source: Company Filings Note: As of May 14, 2020 (1) As measured by rental income and square feet under management (2) Includes historical performance of the Company’s predecessor and prior business activities of Andrew Spodek

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COMPANY HISTORY

19.4M

Site SF portfolio of owned / managed commercial property in 49 states

100%

U.S. Government independent agency tenant

3.5M

SF portfolio of owned / managed commercial property in 49 states

98%

Weighted average lease renewal rate since 2009(2)

567

Properties owned

#1

One of nation’s largest managers of properties leased to the USPS(1)

Nationwide Postal Management founded by Andrew Spodek

$98M

Capital deployed into 290+ postal properties since IPO

403

Properties under management

2004 2017 2018 May 2019 May 2020

PSTL completed $77 million IPO with a portfolio of 271 properties Jeremy Garber joined executive team Postal Realty Trust, Inc. incorporated in Maryland PSTL portfolio exceeds 565

• wned assets

Investment Highlights

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HIGH QUALITY, GEOGRAPHICALLY DIVERSE PORTFOLIO OF POSTAL PROPERTIES WITH ATTRACTIVE FUNDAMENTALS FRAGMENTED MARKET OFFERS COMPELLING OPPORTUNITY TO CONSOLIDATE POSTAL PROPERTIES STABLE GOVERNMENT-BACKED TENANT PROVIDES RELIABLE CASH FLOWS CRITICAL INFRASTRUCTURE TO E-COMMERCE AND LAST-MILE DELIVERY MULTIPLE SOURCES OF CAPITAL TO SUPPORT GROWTH EXPERIENCED MANAGEMENT TEAM WITH STRONG ALIGNMENT AND OWNERSHIP OF COMMON EQUITY

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Source: Company Filings Note: As of May 14, 2020 (1) Map locations reflect owned properties only (2) Annualized gross rent is calculated by multiplying (a) the most recent contractual rent by (b) 12 for all Purchased Properties

Attractive Owned Portfolio Fundamentals

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Portfolio Highlights Locations 567 Properties (47 States) Maximum State Rent Concentration (% annualized rent) 9.4% (WI) Total Square Footage 1,762,013 sq ft Weighted Average Rent $9.83 per sq ft Property Type US Postal Properties Occupancy 100.0%

Geographically Diverse Portfolio Region Sq Ft % Sq Ft

Midwest 662,217 38% Northeast 270,518 15% South 646,749 37% West 182,529 10% Total 1,762,013 100%

PORTFOLIO BY % OF AGGREGATE INTERIOR SQ FT PORTFOLIO BY % OF ANNUALIZED GROSS RENT(2) Region Rent % Rent

Midwest $5,552,537 32% Northeast 3,543,535 20% South 5,982,029 35% West 2,240,526 13% Total $17,318,627 100%

OVERVIEW OF PSTL’S OWNED PORTFOLIO(1)

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Midwest 32% Northeast 20% South 35% West 13%

Midwest 38% Northeast 15% South 37% West 10%

Stable Tenant With ~98% Retention Rate

Upcoming Lease Expirations Provide Organic Growth Opportunity

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▪ Historical weighted average lease retention rate of 97.9% since 2009 ▪ Leases are typically five year terms ▪ Well positioned lease expiration schedule with 73% of leases (by rent) expiring after 2021 ▪ In 2019 and YTD 2020, average annual re-leasing spreads of 1.9%

• n properties with predetermined

renewal options

Source: Company Filings Note: As of May 14, 2020 (1) Represents the weighted average lease retention of our predecessor for owned and managed properties prior to our IPO from 2009 to 2019 (2) Includes 39 holdover leases that are paying monthly while a new lease is being negotiated with the USPS (3) Expiring rent calculated on last contractual rent paid monthly annualized (4) 135 of the 217 leases set to expire are under a master lease that expires in 2022

Year Number of Properties Square Feet Annual Rent(3) 2020 88 266,796 $2,874,373 2021 70 160,774 $1,440,121 2022 217 546,611 $4,536,299 2023 56 228,885 $2,753,034 Thereafter 136 558,947 $5,714,800 Total 567 1,762,013 $17,318,627

HISTORIC LEASE RETENTION RATE(1)

(4)

96.7% 94.7% 98.9% 96.9% 96.7% 97.8% 99.4% 99.2% 98.4% 96.3% 100.0% 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 YTD

Summary of Lease Expirations

Weighted Avg: 97.9%

(2)

1

2019

(1) (2)

▪ Unlike, GSA leases USPS leases are not subject to annual budgetary appropriations ▪ USPS leases are not full service gross leases ▪ Upon lease renewal, no tenant improvements or free rent

Favorable Lease Structure

USPS Leases Have More Favorable Lease Terms Than GSA Leases

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Typical Tenant Responsibilities Typical PSTL USPS (Old) Typical PSTL USPS (New) GSA Gross Lease Single Net Double Net Triple Net

Taxes ✓ ✓ ✓ ✓ ✓ Insurance ✓ ✓ Utilities ✓ ✓ ✓ Maintenance ✓ ✓ ✓ Roof / Structure Plumbing Systems Electrical Components Routine

1

Rental rates expected to increase commensurate with additional expenses Yields expected to remain unchanged PSTL typical lease form will shift certain operating expenses (including electrical components and plumbing systems) to landlord

OVERVIEW OF NEW USPS LEASE

▪ PSTL and USPS are negotiating an addendum to a new lease, which is not expected to have a material economic impact ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓

Source: Company Filings Note: As of May 14, 2020 (1) Reflects estimated Postal Properties leased to the USPS less PSTL’s owned and managed portfolios

Significant Opportunities for Growth

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PSTL Can Be An Institutional Consolidator

▪ Approximately 23,000 postal properties are privately owned and leased back to the Postal Service ▪ In addition to its portfolio of 567 owned assets, PSTL manages 403 postal properties through its taxable REIT subsidiary – PSTL maintains a right of first offer (“ROFO”) on more than 250 of those locations ▪ PSTL’s owned and managed portfolios represent 2.5% and 1.8% of this addressable market, respectively

PSTL Owned Postal Properties 567 PSTL Managed Postal Properties 403 Other Privately- Owned Post Offices Leased to USPS 22,030

FRAGMENTED POSTAL PROPERTIES OWNERSHIP

(1)

OVERVIEW OF PSTL’S MANAGED PORTFOLIO

2

871,843 1,762,013

May 2019 Current

271 567

May 2019 Current

Improved Financing Strategies Executed On Acquisition Strategy

PROPERTY COUNT

Company Activity Post-IPO

Meaningful Growth Since IPO

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SQUARE FOOTAGE +109.2% Growth ▪ Established a $100 million revolving credit facility – Exercised a $50 million accordion feature for total capacity of $150 million(1) ▪ Utilized 1,307,683 OP units to partially fund the acquisition of two portfolios comprised of 135 postal properties +102.1% Growth +107.5% Growth ▪ Acquired 296 additional properties for $98 million – Over 890,000 net leasable interior square feet acquired – Weighted average rental rate of $9.83 / SF across

• wned portfolio versus $9.58 / SF at IPO

ANNUALIZED RENTAL INCOME

2

Source: Company Filings Note: As of May 14, 2020; portfolio statistics reflect owned properties only (1) Assumes all borrowing base properties are unencumbered and subject to an enforceable, which excludes the 39 properties currently in holdover status $8,348,003 $17,318,627

May 2019 Current

▪ Provides universal delivery and retail service distributing approximately 142.6 billion mail pieces to nearly 160 million unique delivery points from ~31,300 facilities a year – In 2019, the USPS added approximately 1.3 million delivery points to its network – USPS handles 48% of the world’s mail by volume ▪ Employs 633,000 employees ▪ USPS sits at the core of the $1.4 trillion mailing industry, which employs over 7.5 million people ▪ Task Force on the U.S. Postal System refers to the USPS as being critical to the national infrastructure ▪ USPS reported operating revenue of $71.1B for its fiscal year 2019 – If the USPS were a private sector company, it would rank 44th in the 2019 Fortune 500

United States Postal Service

Overview And Key Facts

Source: USPS Website, 2018 Annual Report to Congress, 2019 USPS 10-K, Report from the Task Force on the United States Postal System, USPS Office of Inspector General Website, 2019 USPS Postal Facts Companion

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48%

Of the world’s mail volume is handled by the USPS

$71.1B

In total operating revenue in FY 2019

~31,300

Number of Postal Service – managed retail offices

Nearly 160M

Unique Delivery Points

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Compensation & Benefits, 59.5% Retirement Benefits, 7.8% Retiree Health Benefits, 5.7% Workers' Compensation, 4.4% Transportation, 10.2% All Other Operating Expenses, 11.1% Rent, 1.3%

BREAKDOWN OF OPERATING EXPENSES: FY 2019

▪ The digital world provides opportunities and challenges to USPS revenue ▪ USPS is a self-supporting, independent federal agency that receives no government appropriations ▪ Business profitability is primarily driven by personnel and related costs, that comprised over 77% of its operating expenses in fiscal year 2019 ▪ Lease payments in fiscal year 2019 totaled approximately $1.1 billion, representing only 1.3% of the USPS’s

• perating expense

▪ POStPlan (Phase 2: Network Rationalization) was completed in February 2015 – aligning office hours, staffing and facilities ‒ Generated an estimated $500 million in annual cost savings ▪ USPS has guided to $0.5 billion of 2020 revenue growth (0.7%) driven primarily by growth in demand for package delivery and a 4.7% average price increase(1)

USPS Financial Overview

Strong Focus On Revenue Growth & Labor Cost Management

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Personnel and Related Costs Other

3

Source: USPS 2019 10-K (1) The USPS has not issued updated guidance in light of the ongoing COVID-19 pandemic

$449.9 $514.8 $586.9 $668.5 $759.4 $858.9 $969.7 2017 2018 2019E 2020E 2021E 2022E 2023E

▪ As e-commerce has grown, the USPS’s shipping and package services have proven vital to “last mile” deliveries – The USPS empowers e-commerce retailers to meet growing consumer delivery demands in the digital era – As a result, USPS has experienced compound annual revenue growth of 8.8% since FY 2011 ▪ The ~31,300 USPS facilities represent the largest retail distribution network in the United States – USPS’s unmatched network is both time and cost prohibitive to replicate, giving it a virtual monopoly on last mile delivery – In rural areas, these facilities are often the single government touch-point within the community ▪ The fastest growing shipping category is the cost-effective “Parcel Select” option, where packages are delivered to the post office for last-mile delivery – Parcel Select has driven shipping and package revenue, growing 20.7% compounded from fiscal year 2011 through fiscal year 2019

E-Commerce Growth

E-Commerce Has Fueled Revenue Growth For The Postal Service

Source: USPS 10-K 2011-2019, eMarketer, Politifact

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EXPECTED GROWTH IN U.S. E-COMMERCE MARKET ANNUAL PARCEL SELECT VS. TOTAL PACKAGE REVENUE TOTAL REVENUE VS. % PACKAGE DELIVERY REVENUE

($ in billions) ($ in billions) ($ in billions)

$2.1 $2.6 $3.4 $4.7 $5.7 $6.7 $7.1 $12.6 $13.5 $15.1 $17.4 $19.5 $21.5 $22.8 17% 19% 22% 27% 29% 31% 31%

FY2013 FY2015 FY2017 FY2019

Parcel Select Revenue Total Package Revenue % Parcel Select

$67.8 $68.8 $70.4 $69.6 $70.6 $71.1 20% 22% 25% 28% 30% 32%

FY2014 FY2015 FY2016 FY2017 FY2018 FY2019

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Sector Impact from COVID-19

The USPS Remains An Essential Service With All Locations Open And Paying Rent

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Postal Service Impact

• The Postal Service is a vital government service, its comprehensive delivery network covers every

address in the country that cannot be replicated by private actors, or, for the foreseeable future, displaced by emerging delivery technologies

• The Postal Service delivers much needed medications, Social Security, and stimulus checks, and is the

leading delivery service for online purchases

• The USPS has paid 100% of its rent YTD and is expected to experience no interruption in rental

payments

• The ongoing COVID-19 pandemic has resulted in a reduction in commercial activity and has resulted in

a drop in first class mail while package delivery has increased

• As part of the CARES Act (signed into law in March 2020) Congress authorized a $10 billion Treasury

loan to the USPS to sustain operations during near-term anticipated shortfalls subject to certain conditions

PSTL Impact

• The outlook for our business remains positive as our stable portfolio of postal properties is backed by

an independent agency of the U.S. government, is 100% occupied, and has had a 98% lease renewal rate from 2009 through 2019

4

We remain committed to our pre and post-IPO goals of acquiring properties and increasing dividends; however, given disruption to the broader economy we intend to be prudent in reaching external growth targets while managing our cash and liquidity

Source: USPS Media Statement on April 30, 2020, USPS Service Alerts, USPS Continuity of Operations Update

▪ Simple capital structure with no joint ventures ▪ Successfully closed property transactions with OP units, issuing $22.2 million of OP Units priced at $17.00/share to partially fund the acquisition of two portfolios comprised of 135 postal properties ▪ Deliberately slowed pace of growth due to current economic environment ▪ Long-term target debt ratio of 40% of asset cost and Net-Debt to EBITDA ratio of under 6.0x ▪ Limited capacity on Revolving Line of credit due to limits placed on borrowing base, working with lending group on an amendment to facility to increase availability

14

Common Equity OP Units Revolving Line of Credit Property Level Mortgages

5 Multiple Sources of Capital to Support Growth

Experienced Management Team

Decades Of Postal And Real Estate Experience

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▪ Founder and CEO of the Company’s predecessor, Nationwide Postal Management (“NPM”), the largest manager of USPS-leased properties in the United States ▪ More than 20 years of experience exclusively focused on investing in and managing postal properties ▪ Prior to founding NPM, led acquisitions and property management for his family’s private real estate investment activities ▪ Serves on the board of directors of the Association of United States Postal Lessors ▪ M.S., Real Estate, New York University; B.B.A., Finance & International Management, Boston University ▪ Joined in January 2017 and leads all financial, operational and strategic activities of the company ▪ Prior to joining, served as a consultant to private real estate investment companies and family offices ▪ From June 2014 to December 2015, served as the Chief Operating Officer of Burford Capital (LON: BUR), a London Stock Exchange-listed global finance firm focused on litigation finance and specialty finance for the legal industry ▪ From 2004 to 2014, served as the chief operating officer for various hedge funds, including Longacre Fund Management and Trilogy Capital Management ▪ From 1999 to 2004, worked at Lehman Brothers in Equity Capital Markets and Prime Brokerage divisions ▪ J.D., Benjamin N. Cardozo School of Law; B.S., Economics, Yeshiva University ▪ Joined in January 2019 ▪ Prior to 2019 and beginning in 2012, held the role of Chief Accounting Officer of NorthStar Asset Management Group,

• Inc. (NYSE: NSAM), an NYSE-listed global asset management firm focused on managing real estate and other

investment platforms until its merger with Colony Capital, Inc. (NYSE: CLNY), a publicly traded REIT ▪ From 1999 to 2011, held various roles of increasing responsibility at Ernst & Young where he most recently served as a Senior Manager ▪ Certified Public Accountant (CPA); B.S., Accounting, Yeshiva University

Andrew Spodek

Chief Executive Officer

Jeremy Garber

President, Treasurer & Secretary

Matt Brandwein

SVP & Chief Accounting Officer

6

Strong Independent Board & Investor Alignment

Extensive Postal, Real Estate And Public Company Knowledge

Note: Board of Directors includes Andrew Spodek

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Patrick Donahoe – Independent Chairman of the Board

▪ Served as the 73rd Postmaster General of the USPS from October 2010 until his retirement in February 2015 ▪ Career with USPS spanned 39 years, having started as a postal clerk in Pittsburgh, PA in 1975 ▪ Prior to appointment as Postmaster General, served as the 19th Deputy Postmaster General

Barry Lefkowitz – Independent Director

▪ President and CEO of Huntington Road Advisors LLC, and Co-Founder of HMC Real Estate Services LLC ▪ Served as EVP and CFO of Mack-Cali Realty Corporation (NYSE: CLI) from 1996 to 2014 ▪ Served as Interim CFO of Brixmor Property Group Inc. (NYSE: BRX) in 2016 ▪ Serves on Board of Directors of ShopOne Centers REIT, Inc.

Jane Gural-Senders – Independent Director

▪ Executive Director and Principal at GFP Real Estate, which owns and manages a portfolio of approximately 50 properties comprising 11 million square feet ▪ Serves on boards of directors for Gural JCC of the Greater Five Towns, Flatiron BID, Real Estate Committee for Yeshiva University and the American Associates of Ben-Gurion University

Anton Feingold – Independent Director

▪ Managing Director and Associate General Counsel, Real Estate in the Legal Group of Ares

• Management. General Counsel, Vice President and Secretary of Ares Commercial Real Estate

Corporation (NYSE: ACRE), Assistant Secretary of Ares Management Corporation (NYSE: ARES) and Vice President and Assistant Secretary of CION Ares Diversified Credit Fund ▪ Senior Associate at Clifford Chance LLP from 2004 to 2014, where he was a member of the firm’s capital markets and real estate groups Strong Alignment of Interests Management and Board own over 29% pre-offering of the outstanding equity interest in PSTL Emphasis on equity-based compensation Internally managed and advised Opted out of Maryland anti-takeover provisions Independent Board of Directors with industry and public company expertise No stockholder rights plan Independent Chairman

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Investment Highlights

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HIGH QUALITY, GEOGRAPHICALLY DIVERSE PORTFOLIO OF POSTAL PROPERTIES WITH ATTRACTIVE FUNDAMENTALS FRAGMENTED MARKET OFFERS COMPELLING OPPORTUNITY TO CONSOLIDATE POSTAL PROPERTIES STABLE GOVERNMENT-BACKED TENANT PROVIDES RELIABLE CASH FLOWS CRITICAL INFRASTRUCTURE TO E-COMMERCE AND LAST-MILE DELIVERY MULTIPLE SOURCES OF CAPITAL TO SUPPORT GROWTH EXPERIENCED MANAGEMENT TEAM WITH STRONG ALIGNMENT AND OWNERSHIP OF COMMON EQUITY

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