In the wake of Uber's (UBER) anticlimactic IPO, the IPO market is off to an unsurprisingly poor start this week. First, Applied Therapeutics' (APLT) deal priced below expectations yesterday. Then, it was reported that PIMCO Mortgage Trust (PMTG) has postponed its 50 mln share deal, citing unfavorable market conditions.
Finally, this morning, Postal Realty Trust's (PSTL) delayed and downsized 4.5 mln share IPO priced at $17, below the $19-$21 expected range.
Conditions can change in a heartbeat and the impact caused by UBER's flop is causing ripple effects across the IPO market. The hype, excitement, and anticipation for that IPO had been building for weeks. On the heels of the successful deals from Pinterest (PINS), PagerDuty (PG), Zoom Video (ZM), and Levi Strauss (LEVI), investors were anticipating a strong debut from UBER.
Put another way, the Uber IPO erased the confidence that had been building in the IPO market over the past couple of months. At the same time, companies that are considering going public may reconsider now due to the more fragile psyche and confidence of investors.
One has to wonder, though, if it had not been for the negative headlines regarding the trade dispute with China that sank the stock market, would UBER's IPO have fared much better? And, in turn, would we still be talking about a robust IPO market?
That's impossible to say, but, that seems quite feasible. In any event, PSTL was at least able to launch its IPO in this tough environment, although it raised about 24% less in proceeds that it had expected. The stock is set to open for trading later this morning on the NYSE.
PSTL is an internally managed real estate corporation that owns and manages properties leased to the United States Postal Service. Its CEO, Andrew Spodek, currently owns interests in 199 of the 271 initial properties PSTL will own, which he will contribute to the company as part of the formation transactions.
Upon completion of this offering and the related formation transactions, Mr. Spodek will own approximately 29.0% of the fully diluted equity interests in PSTL.
As of September 30, 2018, the USPS managed a network of over 31,000 properties of which over 23,000 were owned by private owners and leased to the USPS. The company believes that this network of properties is a critical element of the nation’s logistics infrastructure that facilitates cost effective and efficient “last mile” delivery solutions for the nation’s largest e-commerce providers including Amazon, FedEx and UPS.
PSTL's objective is to create stockholder value by generating attractive risk-adjusted returns through expanding its portfolio of owned and managed postal properties leased to the USPS. When assessing acquisitions, it looks at properties that it believes are integral to USPS operations with a range of remaining lease terms.
It also seeks to acquire properties where it believes its property management expertise can enhance returns through reducing costs. In addition, PSTL intends to expand its third-party property management, consulting and advisory services to enhance revenue and create potential future acquisition opportunities.
The company believes the fragmented ownership and specialized nature of properties leased to the USPS have limited the number and growth of professional property managers for these properties.
FinancialsFor FY18, rent income increased by 8.6% to $5.7 mln primarily due to property acquisitions in 2018. Tenant reimbursements increased by 9.6% to $892,541, resulting from property acquisitions and increased real estate tax rates.
The company generated operating income of $2.57 mln, up 25 yr/yr. Adjusted funds from operations (AFFO) increased by 105% yr/yr to $5.4 mln.