Andrew Spodek, CEO of Postal Realty Trust (NYSE: PSTL), was a guest on the latest edition of the Nareit REIT Report podcast.
Postal Realty Trust owns 366 post office properties across 43 states and was one of only a handful of REIT IPOs that occurred in 2019.
Spodek noted that there are 32,000 postal facilities throughout the country, of which 23,000 are leased and pay about $1 billion in gross rent. Of those 23,000, 16,000 are owned individually, he said: “That’s how fragmented this market is.”
As for the timing of the IPO, Spodek pointed to two key determining factors: a “generational shift” in the ownership of post office assets; and a decision by the post office to outsource its real estate services, “which is very different from what these owners are used to.”
Providing owners with an ability to move their assets into institutional hands “was something we felt was very timely,” Spodek said.
Spodek also highlighted the growing role of the postal service in terms of last mile delivery.
“I believe the postal service is the last mile…the postal service delivers to 159 million delivery points every single day. For all intents and purposes that’s the target market of every online retailer,” he said.
“As e-commerce grows…every online retailer is going to try to tap into this last mile network that the post office has created,” Spodek said.
Meanwhile, Spodek highlighted some of the benefits of investing in post office assets that many investors are unfamiliar with.
“People don’t recognize the opportunity set…to be able to find a real estate asset that has a credit tenant in place with the retention rates that we are able to provide, and you’re able to buy that asset with a 7%-9% return—that by itself is not common,” he said. At the same time, “to be able to look at an entire asset class that has this size of opportunity…[and] have the largest single institutional player in the space roll that space up at these capitalization rates—the opportunity is just tremendous.”