$7.20
$19.00
bear $7.20
base $15.80
bull $19.00
margin of safety $9.50
market price* $21.99
Postal Realty Trust owns 1,917 properties (about 7.1 million leasable square feet in 49 states and one territory) that are leased mainly to the United States Postal Service (USPS), and was 99.8% occupied at December 31, 2025. It also manages 333 more postal properties owned by its chief executive and his affiliates. Rent is the business; it is set by long-standing government leases with a weighted remaining term of about four years and expirations through 2038. The company is structured so that some of its economic interest is held through operating partnership units, so all per-share figures here count those units together with the Class A shares (about 34.9 million in total in early 2026). How we measured earnings. We start from cash generated by operations, remove swings in working capital, and subtract stock-based compensation ($6.3 million in 2025) as a real cost. Only capital improvements to existing buildings count as capex; purchases of new properties ($123 million in 2025) are treated as growth investment funded by new debt and new units, and the extra units are counted in the per-unit figure so that dilution is charged. On that basis earnings per share and unit were about $0.83, $0.72, $0.77, $0.80 and $0.98 for 2021 through 2025. Total earnings grew from $14.1 million to $30.4 million, but the unit count grew nearly as fast, so per-unit progress was flat until 2025. We set the starting level at $0.95, a little under 2025's $0.98, because first-half 2026 operating cash flow of $25.0 million (against $22.2 million a year earlier) puts earnings per unit on the same basis roughly 20% above the prior-year half, so the 2025 step-up appears to be holding. Per-unit earnings growth in 2025 was about 22%; the base case assumes 3% in year one, well below that, so no reversal of a slowdown is being assumed. Base case (about $15.80 per share). The 1,917 properties keep paying rent: occupancy is 99.8%, the USPS holds over rather than leaving on the few expired leases (nine at February 2026, with no notice to vacate), and new leases carry annual escalations. We credit growth of 3% a year for five years, then 2% for five years, which is below the roughly 4% a year per-unit growth the company actually produced from 2021 to 2025 through its repeated small acquisitions of postal properties (roughly $70 to $125 million a year, with a right to buy a further 189 properties from its chief executive). After year ten we hold earnings flat through year 30 and then assign no value, since nothing in the filings supports growth or permanence beyond that. Bear case (about $7.20 per share). Per-unit earnings sit at $0.65 with no growth for ten years: the low of the last five years was $0.72, and refinancing the $329 million of credit-facility borrowings (term loans due 2028 and 2030) at rates one percentage point higher would cost about $0.09 per unit. The USPS, which carries large retiree and debt obligations and has vacated two properties, renews on weaker terms or consolidates space, and earnings then fade steadily to zero over the following 20 years. Bull case (about $19.00 per share). The company keeps buying properties at the pace it has sustained and per-unit earnings start at $1.00, growing 4% a year for five years and 3% for five years, then hold flat for 25 more years. This is the demonstrated 2021 to 2025 per-unit rate; we did not credit faster growth because the first-half 2026 surge is only two quarters old. What could make this wrong. Most rent comes from one government tenant, so a policy change to the USPS, including privatization or relocation of delivery operations, would hit the whole portfolio at once. The average lease has only about four years left, so renewal terms matter more than the 99.8% occupancy suggests. Acquisitions are financed with new units, so buying at poor prices would erode per-unit value. Interest is already deducted from our earnings figure, so debt is reflected there and not deducted again. Where these risks bite, they are captured in the bear case. Given the single-tenant concentration and the borrowed money, a substantial discount to the base value is needed for a margin of safety.