Postal Realty Trust: A Good Time To Get In (Rating Upgrade)
Summary
- Upgrading PSTL to Buy as management now secures longer leases with annual rent escalators, addressing prior concerns about margin compression.
- PSTL trades at an attractive discount, with its portfolio valued at an 8.55% cap rate versus acquisition rates of 7.6%, creating immediate value.
- Dividend coverage has improved to historic highs, and future dividend growth should accelerate as more leases include 3% annual escalators.
- Risks include small market cap and limited analyst coverage, but improved business fundamentals and a solid playbook support a positive long-term outlook.
Analyst’s Disclosure:I/we have a beneficial long position in the shares of PSTL either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.
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