dea-10q_20220630.htm
false 2022 Q2 0001622194 --12-31 DC http://fasb.org/us-gaap/2022#PrepaidExpenseAndOtherAssets http://fasb.org/us-gaap/2022#AccountsPayableAndOtherAccruedLiabilities 2025-07 0.0267 0.0391 L + 150bps 0.0500 0.0441 0.0446 0.0421 0.0359 0.0340 0.0368 http://fasb.org/us-gaap/2022#AccountingStandardsUpdate201613Member http://fasb.org/us-gaap/2022#AccountingStandardsUpdate201613Member http://fasb.org/us-gaap/2022#AccountingStandardsUpdate201613Member http://fasb.org/us-gaap/2022#AccountingStandardsUpdate201613Member 0001622194 2022-01-01 2022-06-30 xbrli:shares 0001622194 2022-07-26 iso4217:USD 0001622194 2022-06-30 0001622194 2021-12-31 iso4217:USD xbrli:shares 0001622194 2022-04-01 2022-06-30 0001622194 2021-04-01 2021-06-30 0001622194 2021-01-01 2021-06-30 0001622194 dea:TenantReimbursementsMember 2022-04-01 2022-06-30 0001622194 dea:TenantReimbursementsMember 2021-04-01 2021-06-30 0001622194 dea:TenantReimbursementsMember 2022-01-01 2022-06-30 0001622194 dea:TenantReimbursementsMember 2021-01-01 2021-06-30 0001622194 us-gaap:RealEstateOtherMember 2022-04-01 2022-06-30 0001622194 us-gaap:RealEstateOtherMember 2021-04-01 2021-06-30 0001622194 us-gaap:RealEstateOtherMember 2022-01-01 2022-06-30 0001622194 us-gaap:RealEstateOtherMember 2021-01-01 2021-06-30 0001622194 2020-12-31 0001622194 2021-06-30 0001622194 dea:OperatingPropertiesMember 2022-01-01 2022-06-30 0001622194 dea:OperatingPropertiesMember 2021-01-01 2021-06-30 0001622194 dea:DevelopmentPropertiesMember 2022-01-01 2022-06-30 0001622194 dea:DevelopmentPropertiesMember 2021-01-01 2021-06-30 0001622194 dea:LongTermIncentivePlanMember 2022-01-01 2022-06-30 dea:Property 0001622194 dea:WhollyOwnedOperatingPropertiesMember 2022-06-30 0001622194 us-gaap:CorporateJointVentureMember 2022-06-30 xbrli:pure 0001622194 dea:WhollyOwnedOperatingPropertiesMember 2022-01-01 2022-06-30 0001622194 dea:WhollyOwnedOperatingPropertiesMember us-gaap:GovernmentMember 2022-06-30 utr:sqft 0001622194 dea:WhollyOwnedOperatingPropertiesMember dea:PrivateTenantsMember 2022-06-30 0001622194 dea:WhollyOwnedPropertiesUnderDevelopmentMember 2022-06-30 0001622194 dea:OperatingPartnershipMember 2022-01-01 2022-06-30 0001622194 dea:OperatingPropertiesAcquiredMember dea:FBITampaAndNARAMember 2022-06-30 0001622194 dea:OperatingPropertiesAcquiredMember us-gaap:RealEstateInvestmentMember dea:FBITampaAndNARAMember 2022-06-30 0001622194 dea:OperatingPropertiesAcquiredMember us-gaap:LeasesAcquiredInPlaceMember dea:FBITampaAndNARAMember 2022-06-30 0001622194 dea:OperatingPropertiesAcquiredMember dea:AcquiredLeasingCommissionsMember dea:FBITampaAndNARAMember 2022-06-30 0001622194 dea:OperatingPropertiesAcquiredMember dea:BelowMarketLeasesAssumedMember dea:FBITampaAndNARAMember 2022-06-30 0001622194 dea:OperatingPropertiesAcquiredMember 2022-01-01 2022-06-30 0001622194 us-gaap:LeasesAcquiredInPlaceMember 2022-06-30 0001622194 dea:AcquiredLeasingCommissionsMember 2022-06-30 0001622194 us-gaap:AboveMarketLeasesMember 2022-06-30 0001622194 dea:PaymentInLieuOfTaxesMember 2022-06-30 0001622194 dea:OperatingPropertiesAcquiredMember 2022-06-30 0001622194 dea:MedBaseVentureMember dea:JVPartnerMember 2022-06-30 0001622194 dea:JVPartnerMember 2021-10-13 0001622194 dea:JVPartnerMember dea:VABirminghamAndVAMariettaMember 2022-06-30 0001622194 dea:JVPartnerMember 2022-04-01 2022-06-30 0001622194 dea:JVPartnerMember 2022-01-01 2022-06-30 0001622194 us-gaap:SeriesAPreferredStockMember dea:JVPartnerMember 2022-01-20 0001622194 us-gaap:SeriesAPreferredStockMember dea:JVPartnerMember 2022-01-20 2022-01-20 0001622194 dea:JVPartnerMember 2022-06-30 0001622194 us-gaap:RevolvingCreditFacilityMember 2022-06-30 0001622194 dea:TwoThousandSixteenTermLoanFacilityMember 2022-06-30 0001622194 dea:TwoThousandEighteenTermLoanFacilityMember 2022-06-30 0001622194 dea:TermLoanFacilityMember 2022-06-30 0001622194 dea:TwoThousandSeventeenSeriesASeniorNotesMember dea:SeniorUnsecuredNotesPayableMember 2022-06-30 0001622194 dea:TwoThousandSeventeenSeriesBSeniorNotesMember dea:SeniorUnsecuredNotesPayableMember 2022-06-30 0001622194 dea:TwoThousandSeventeenSeriesCSeniorNotesMember dea:SeniorUnsecuredNotesPayableMember 2022-06-30 0001622194 dea:TwoThousandNineteenSeriesASeniorNotesMember dea:SeniorUnsecuredNotesPayableMember 2022-06-30 0001622194 dea:TwoThousandNineteenSeriesBSeniorNotesMember dea:SeniorUnsecuredNotesPayableMember 2022-06-30 0001622194 dea:TwoThousandNineteenSeriesCSeniorNotesMember dea:SeniorUnsecuredNotesPayableMember 2022-06-30 0001622194 dea:TwoThousandTwentyOneSeriesASeniorNotesMember dea:SeniorUnsecuredNotesPayableMember 2022-06-30 0001622194 dea:TwoThousandTwentyOneSeriesBSeniorNotesMember dea:SeniorUnsecuredNotesPayableMember 2022-06-30 0001622194 us-gaap:NotesPayableOtherPayablesMember 2022-06-30 0001622194 us-gaap:MortgagesMember dea:DEAPleasantonMember 2022-06-30 0001622194 us-gaap:MortgagesMember dea:VAGoldenMember 2022-06-30 0001622194 us-gaap:MortgagesMember dea:MEPCOMJacksonvilleMember 2022-06-30 0001622194 us-gaap:MortgagesMember dea:USFSIIAlbuquerqueMember 2022-06-30 0001622194 us-gaap:MortgagesMember dea:ICECharlestonMember 2022-06-30 0001622194 us-gaap:MortgagesMember dea:VALomaLindaMember 2022-06-30 0001622194 us-gaap:MortgagesMember dea:CBPSavannahMember 2022-06-30 0001622194 us-gaap:MortgagesMember dea:USCISKansasCityMember 2022-06-30 0001622194 us-gaap:MortgagesMember 2022-06-30 0001622194 us-gaap:RevolvingCreditFacilityMember 2022-01-01 2022-06-30 0001622194 us-gaap:MortgagesMember dea:DEAPleasantonMember 2022-01-01 2022-06-30 0001622194 dea:TwoThousandSeventeenSeriesASeniorNotesMember 2022-06-30 0001622194 dea:TwoThousandSeventeenSeriesBSeniorNotesMember 2022-06-30 0001622194 dea:TwoThousandSeventeenSeriesCSeniorNotesMember 2022-06-30 0001622194 dea:TwoThousandNineteenSeriesASeniorNotesMember 2022-06-30 0001622194 dea:TwoThousandNineteenSeriesBSeniorNotesMember 2022-06-30 0001622194 dea:TwoThousandNineteenSeriesCSeniorNotesMember 2022-06-30 0001622194 dea:TwoThousandTwentyOneSeriesASeniorNotesMember 2022-06-30 0001622194 dea:TwoThousandTwentyOneSeriesBSeniorNotesMember 2022-06-30 0001622194 dea:TwoThousandSixteenTermLoanFacilityMember 2022-01-01 2022-06-30 0001622194 dea:TwoThousandEighteenTermLoanFacilityMember 2022-01-01 2022-06-30 0001622194 dea:TwoThousandSeventeenSeriesASeniorNotesMember 2022-01-01 2022-06-30 0001622194 dea:TwoThousandSeventeenSeriesBSeniorNotesMember 2022-01-01 2022-06-30 0001622194 dea:TwoThousandSeventeenSeriesCSeniorNotesMember 2022-01-01 2022-06-30 0001622194 dea:TwoThousandNineteenSeriesASeniorNotesMember 2022-01-01 2022-06-30 0001622194 dea:TwoThousandNineteenSeriesBSeniorNotesMember 2022-01-01 2022-06-30 0001622194 dea:TwoThousandNineteenSeriesCSeniorNotesMember 2022-01-01 2022-06-30 0001622194 dea:TwoThousandTwentyOneSeriesASeniorNotesMember 2022-01-01 2022-06-30 0001622194 dea:TwoThousandTwentyOneSeriesBSeniorNotesMember 2022-01-01 2022-06-30 0001622194 us-gaap:MortgagesMember dea:VAGoldenMember 2022-01-01 2022-06-30 0001622194 us-gaap:MortgagesMember dea:MEPCOMJacksonvilleMember 2022-01-01 2022-06-30 0001622194 us-gaap:MortgagesMember dea:USFSIIAlbuquerqueMember 2022-01-01 2022-06-30 0001622194 us-gaap:MortgagesMember dea:ICECharlestonMember 2022-01-01 2022-06-30 0001622194 us-gaap:MortgagesMember dea:VALomaLindaMember 2022-01-01 2022-06-30 0001622194 us-gaap:MortgagesMember dea:CBPSavannahMember 2022-01-01 2022-06-30 0001622194 us-gaap:MortgagesMember dea:USCISKansasCityMember 2022-01-01 2022-06-30 0001622194 us-gaap:LondonInterbankOfferedRateLIBORMember 2022-01-01 2022-06-30 0001622194 dea:SeniorUnsecuredNotesMember us-gaap:RevolvingCreditFacilityMember 2022-06-30 0001622194 dea:SeniorUnsecuredNotesMember dea:TwoThousandEighteenTermLoanFacilityMember 2022-06-30 0001622194 dea:SeniorUnsecuredCreditFacilityMember dea:TwoThousandSixteenTermLoanFacilityMember 2022-06-30 0001622194 us-gaap:RevolvingCreditFacilityMember dea:TwoThousandEighteenTermLoanFacilityMember 2022-06-30 dea:Swap 0001622194 dea:TwoThousandSixteenTermLoanFacilityMember us-gaap:InterestRateSwapMember 2022-06-30 0001622194 dea:TwoThousandSixteenTermLoanFacilityMember us-gaap:InterestRateSwapMember 2022-01-01 2022-06-30 0001622194 dea:TwoThousandEighteenTermLoanFacilityMember us-gaap:InterestRateSwapMember 2022-06-30 0001622194 dea:TwoThousandEighteenTermLoanFacilityMember us-gaap:InterestRateSwapMember 2022-01-01 2022-06-30 0001622194 us-gaap:RevolvingCreditFacilityMember dea:TwoThousandEighteenTermLoanFacilityMember dea:FirstAmendmentToSecondAmendedAndRestatedSeniorCreditAgreementMember 2022-07-22 2022-07-22 0001622194 us-gaap:RevolvingCreditFacilityMember dea:TwoThousandEighteenTermLoanFacilityMember 2022-01-01 2022-06-30 0001622194 dea:InterestSwapRateAtOnePointFourOnePercentageFixedRateMember 2022-06-30 0001622194 dea:InterestSwapRateAtTwoPointSevenOnePercentageFixedRateMember 2022-06-30 0001622194 dea:InterestSwapRateAtOnePointFourOnePercentageFixedRateMember 2022-01-01 2022-06-30 0001622194 dea:InterestSwapRateAtTwoPointSevenOnePercentageFixedRateMember 2022-01-01 2022-06-30 0001622194 us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsRecurringMember 2022-06-30 0001622194 dea:TwoThousandSixteenTermLoanFacilityMember 2022-06-30 0001622194 dea:TwoThousandEighteenTermLoanFacilityMember 2022-06-30 0001622194 dea:NotesPayableMember 2022-06-30 0001622194 dea:MortgagesPayableMember 2022-06-30 0001622194 us-gaap:RestrictedStockMember 2022-04-01 2022-06-30 0001622194 us-gaap:RestrictedStockMember 2021-04-01 2021-06-30 0001622194 us-gaap:RestrictedStockMember 2022-01-01 2022-06-30 0001622194 us-gaap:RestrictedStockMember 2021-01-01 2021-06-30 0001622194 us-gaap:RestrictedStockMember 2022-06-30 0001622194 us-gaap:RestrictedStockMember 2021-12-31 0001622194 dea:OperationalMember dea:JanuaryThreeTwoThousandTwentyTwoMember 2022-01-01 2022-06-30 0001622194 us-gaap:PerformanceSharesMember dea:JanuaryThreeTwoThousandTwentyTwoMember 2022-01-01 2022-06-30 0001622194 dea:ServicesMember dea:JanuaryThreeTwoThousandTwentyTwoMember 2022-01-01 2022-06-30 0001622194 dea:ServicesMember dea:MayElevenTwoThousandTwentyTwoMember 2022-01-01 2022-06-30 0001622194 dea:LongTermIncentivePlanMember 2022-04-01 2022-06-30 0001622194 dea:LongTermIncentivePlanMember 2021-04-01 2021-06-30 0001622194 dea:LongTermIncentivePlanMember 2021-01-01 2021-06-30 0001622194 dea:LongTermIncentivePlanMember 2022-06-30 0001622194 dea:LongTermIncentivePlanMember 2021-12-31 0001622194 us-gaap:CommonStockMember 2022-03-31 0001622194 us-gaap:AdditionalPaidInCapitalMember 2022-03-31 0001622194 us-gaap:RetainedEarningsMember 2022-03-31 0001622194 us-gaap:AccumulatedDistributionsInExcessOfNetIncomeMember 2022-03-31 0001622194 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2022-03-31 0001622194 dea:NoncontrollingInterestInOperatingPartnershipMember 2022-03-31 0001622194 2022-03-31 0001622194 us-gaap:AdditionalPaidInCapitalMember 2022-04-01 2022-06-30 0001622194 dea:NoncontrollingInterestInOperatingPartnershipMember 2022-04-01 2022-06-30 0001622194 us-gaap:AccumulatedDistributionsInExcessOfNetIncomeMember 2022-04-01 2022-06-30 0001622194 us-gaap:CommonStockMember 2022-04-01 2022-06-30 0001622194 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2022-04-01 2022-06-30 0001622194 us-gaap:RetainedEarningsMember 2022-04-01 2022-06-30 0001622194 us-gaap:CommonStockMember 2022-06-30 0001622194 us-gaap:AdditionalPaidInCapitalMember 2022-06-30 0001622194 us-gaap:RetainedEarningsMember 2022-06-30 0001622194 us-gaap:AccumulatedDistributionsInExcessOfNetIncomeMember 2022-06-30 0001622194 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2022-06-30 0001622194 dea:NoncontrollingInterestInOperatingPartnershipMember 2022-06-30 0001622194 us-gaap:CommonStockMember 2021-03-31 0001622194 us-gaap:AdditionalPaidInCapitalMember 2021-03-31 0001622194 us-gaap:RetainedEarningsMember 2021-03-31 0001622194 us-gaap:AccumulatedDistributionsInExcessOfNetIncomeMember 2021-03-31 0001622194 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2021-03-31 0001622194 dea:NoncontrollingInterestInOperatingPartnershipMember 2021-03-31 0001622194 2021-03-31 0001622194 us-gaap:RetainedEarningsMember srt:CumulativeEffectPeriodOfAdoptionAdjustmentMember 2021-04-01 2021-06-30 0001622194 srt:CumulativeEffectPeriodOfAdoptionAdjustmentMember 2021-04-01 2021-06-30 0001622194 us-gaap:AdditionalPaidInCapitalMember 2021-04-01 2021-06-30 0001622194 dea:NoncontrollingInterestInOperatingPartnershipMember 2021-04-01 2021-06-30 0001622194 us-gaap:AccumulatedDistributionsInExcessOfNetIncomeMember 2021-04-01 2021-06-30 0001622194 us-gaap:CommonStockMember 2021-04-01 2021-06-30 0001622194 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2021-04-01 2021-06-30 0001622194 us-gaap:RetainedEarningsMember 2021-04-01 2021-06-30 0001622194 us-gaap:CommonStockMember 2021-06-30 0001622194 us-gaap:AdditionalPaidInCapitalMember 2021-06-30 0001622194 us-gaap:RetainedEarningsMember 2021-06-30 0001622194 us-gaap:AccumulatedDistributionsInExcessOfNetIncomeMember 2021-06-30 0001622194 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2021-06-30 0001622194 dea:NoncontrollingInterestInOperatingPartnershipMember 2021-06-30 0001622194 us-gaap:CommonStockMember 2021-12-31 0001622194 us-gaap:AdditionalPaidInCapitalMember 2021-12-31 0001622194 us-gaap:RetainedEarningsMember 2021-12-31 0001622194 us-gaap:AccumulatedDistributionsInExcessOfNetIncomeMember 2021-12-31 0001622194 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2021-12-31 0001622194 dea:NoncontrollingInterestInOperatingPartnershipMember 2021-12-31 0001622194 us-gaap:AdditionalPaidInCapitalMember 2022-01-01 2022-06-30 0001622194 dea:NoncontrollingInterestInOperatingPartnershipMember 2022-01-01 2022-06-30 0001622194 us-gaap:AccumulatedDistributionsInExcessOfNetIncomeMember 2022-01-01 2022-06-30 0001622194 us-gaap:CommonStockMember 2021-01-01 2021-06-30 0001622194 us-gaap:CommonStockMember 2022-01-01 2022-06-30 0001622194 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2022-01-01 2022-06-30 0001622194 us-gaap:RetainedEarningsMember 2022-01-01 2022-06-30 0001622194 us-gaap:CommonStockMember 2020-12-31 0001622194 us-gaap:AdditionalPaidInCapitalMember 2020-12-31 0001622194 us-gaap:RetainedEarningsMember 2020-12-31 0001622194 us-gaap:AccumulatedDistributionsInExcessOfNetIncomeMember 2020-12-31 0001622194 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2020-12-31 0001622194 dea:NoncontrollingInterestInOperatingPartnershipMember 2020-12-31 0001622194 us-gaap:RetainedEarningsMember srt:CumulativeEffectPeriodOfAdoptionAdjustmentMember 2021-01-01 2021-06-30 0001622194 srt:CumulativeEffectPeriodOfAdoptionAdjustmentMember 2021-01-01 2021-06-30 0001622194 us-gaap:AdditionalPaidInCapitalMember 2021-01-01 2021-06-30 0001622194 dea:NoncontrollingInterestInOperatingPartnershipMember 2021-01-01 2021-06-30 0001622194 us-gaap:AccumulatedDistributionsInExcessOfNetIncomeMember 2021-01-01 2021-06-30 0001622194 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2021-01-01 2021-06-30 0001622194 us-gaap:RetainedEarningsMember 2021-01-01 2021-06-30 0001622194 dea:InstalmentOneQuarterOneTwoThousandTwentyTwoMember 2022-01-01 2022-06-30 0001622194 dea:InstalmentTwoQuarterTwoTwoThousandTwentyTwoMember 2022-01-01 2022-06-30 0001622194 dea:PerformanceBasedLTIPUnitsMember 2022-01-01 2022-06-30 0001622194 dea:ServiceBasedLTIPUnitsMember 2022-01-01 2022-06-30 0001622194 dea:ForwardSalesAgreementMember 2021-08-11 0001622194 2021-08-09 2021-08-11 0001622194 2021-08-11 0001622194 dea:ForwardSalesAgreementMember 2021-12-28 0001622194 dea:ForwardSalesAgreementMember 2022-06-30 0001622194 dea:ForwardSalesAgreementMember 2021-12-28 2021-12-28 0001622194 dea:TwoThousandNineteenATMProgramMember 2019-12-18 2019-12-20 0001622194 dea:TwoThousandTwentyOneATMProgramMember 2021-06-21 2021-06-22 0001622194 dea:TwoThousandNineteenATMProgramMember 2022-01-01 2022-03-31 0001622194 dea:TwoThousandNineteenATMProgramMember 2022-01-01 2022-06-30 0001622194 dea:TwoThousandNineteenATMProgramMember dea:ForwardSalesAgreementMember 2022-01-01 2022-06-30 0001622194 dea:TwoThousandNineteenATMProgramMember dea:ForwardSalesAgreementMember 2022-06-30 0001622194 dea:TwoThousandTwentyOneATMProgramMember 2022-06-30 0001622194 dea:TwoThousandNineteenATMProgramMember 2022-06-30 0001622194 srt:DirectorMember dea:ShareRepurchaseProgramMember srt:MaximumMember 2022-04-28 0001622194 srt:DirectorMember dea:ShareRepurchaseProgramMember srt:MaximumMember 2022-06-30 0001622194 srt:DirectorMember dea:ShareRepurchaseProgramMember 2022-04-28 0001622194 2022-05-09 2022-05-10 0001622194 us-gaap:StockCompensationPlanMember 2022-04-01 2022-06-30 0001622194 us-gaap:StockCompensationPlanMember 2021-04-01 2021-06-30 0001622194 us-gaap:StockCompensationPlanMember 2022-01-01 2022-06-30 0001622194 us-gaap:StockCompensationPlanMember 2021-01-01 2021-06-30 0001622194 dea:ForwardSalesAgreementsMember 2022-01-01 2022-06-30 0001622194 dea:ForwardSalesAgreementsMember 2021-01-01 2021-06-30 0001622194 dea:UnvestedPerformanceBasedLongTermIncentivePlanMember 2022-04-01 2022-06-30 0001622194 dea:UnvestedPerformanceBasedLongTermIncentivePlanMember 2022-01-01 2022-06-30 0001622194 dea:UnvestedPerformanceBasedLongTermIncentivePlanMember 2021-04-01 2021-06-30 0001622194 dea:UnvestedPerformanceBasedLongTermIncentivePlanMember 2021-01-01 2021-06-30 0001622194 us-gaap:ForwardContractsMember 2022-04-01 2022-06-30 0001622194 us-gaap:ForwardContractsMember 2022-01-01 2022-06-30 0001622194 us-gaap:ForwardContractsMember 2021-04-01 2021-06-30 0001622194 us-gaap:ForwardContractsMember 2021-01-01 2021-06-30 0001622194 dea:FixedMember 2022-04-01 2022-06-30 0001622194 dea:FixedMember 2021-04-01 2021-06-30 0001622194 dea:FixedMember 2022-01-01 2022-06-30 0001622194 dea:FixedMember 2021-01-01 2021-06-30 0001622194 dea:VariableMember 2022-04-01 2022-06-30 0001622194 dea:VariableMember 2021-04-01 2021-06-30 0001622194 dea:VariableMember 2022-01-01 2022-06-30 0001622194 dea:VariableMember 2021-01-01 2021-06-30 0001622194 stpr:CA dea:SanDiegoMember dea:LeaseMember 2022-06-30 0001622194 stpr:CA dea:SanDiegoMember dea:LeaseMember 2022-01-01 2022-06-30 0001622194 dea:CorporateOfficeLeasesMember 2022-06-30 0001622194 dea:FederalBureauOfInvestigationMember us-gaap:AccountingStandardsUpdate201409Member 2022-04-01 2022-06-30 0001622194 dea:FederalBureauOfInvestigationMember us-gaap:AccountingStandardsUpdate201409Member 2021-04-01 2021-06-30 0001622194 dea:FederalBureauOfInvestigationMember us-gaap:AccountingStandardsUpdate201409Member 2022-01-01 2022-06-30 0001622194 dea:FederalBureauOfInvestigationMember us-gaap:AccountingStandardsUpdate201409Member 2021-01-01 2021-06-30 0001622194 dea:USJointStaffCommandJSCMember us-gaap:AccountingStandardsUpdate201409Member 2022-04-01 2022-06-30 0001622194 dea:USJointStaffCommandJSCMember us-gaap:AccountingStandardsUpdate201409Member 2021-04-01 2021-06-30 0001622194 dea:USJointStaffCommandJSCMember us-gaap:AccountingStandardsUpdate201409Member 2022-01-01 2022-06-30 0001622194 dea:USJointStaffCommandJSCMember us-gaap:AccountingStandardsUpdate201409Member 2021-01-01 2021-06-30 0001622194 dea:DepartmentOfVeteranAffairsMember us-gaap:AccountingStandardsUpdate201409Member 2022-04-01 2022-06-30 0001622194 dea:DepartmentOfVeteranAffairsMember us-gaap:AccountingStandardsUpdate201409Member 2021-04-01 2021-06-30 0001622194 dea:DepartmentOfVeteranAffairsMember us-gaap:AccountingStandardsUpdate201409Member 2022-01-01 2022-06-30 0001622194 dea:DepartmentOfVeteranAffairsMember us-gaap:AccountingStandardsUpdate201409Member 2021-01-01 2021-06-30 0001622194 dea:FoodAndDrugAdministrationMember us-gaap:AccountingStandardsUpdate201409Member 2021-04-01 2021-06-30 0001622194 dea:FoodAndDrugAdministrationMember us-gaap:AccountingStandardsUpdate201409Member 2022-01-01 2022-06-30 0001622194 dea:FoodAndDrugAdministrationMember us-gaap:AccountingStandardsUpdate201409Member 2021-01-01 2021-06-30 0001622194 dea:CustomsAndBorderProtectionMember us-gaap:AccountingStandardsUpdate201409Member 2022-04-01 2022-06-30 0001622194 dea:CustomsAndBorderProtectionMember us-gaap:AccountingStandardsUpdate201409Member 2022-01-01 2022-06-30 0001622194 dea:UnitedStatesCitizenshipAndImmigrationServicesMember us-gaap:AccountingStandardsUpdate201409Member 2021-04-01 2021-06-30 0001622194 dea:UnitedStatesCitizenshipAndImmigrationServicesMember us-gaap:AccountingStandardsUpdate201409Member 2022-01-01 2022-06-30 0001622194 dea:UnitedStatesCitizenshipAndImmigrationServicesMember us-gaap:AccountingStandardsUpdate201409Member 2021-01-01 2021-06-30 0001622194 dea:NationalParkServiceMember us-gaap:AccountingStandardsUpdate201409Member 2022-04-01 2022-06-30 0001622194 dea:NationalParkServiceMember us-gaap:AccountingStandardsUpdate201409Member 2022-01-01 2022-06-30 0001622194 dea:OccupationalSafetyAndHealthAdministrationMember us-gaap:AccountingStandardsUpdate201409Member 2022-04-01 2022-06-30 0001622194 dea:OccupationalSafetyAndHealthAdministrationMember us-gaap:AccountingStandardsUpdate201409Member 2022-01-01 2022-06-30 0001622194 dea:DrugEnforcementAgencyMember us-gaap:AccountingStandardsUpdate201409Member 2022-04-01 2022-06-30 0001622194 dea:DrugEnforcementAgencyMember us-gaap:AccountingStandardsUpdate201409Member 2022-01-01 2022-06-30 0001622194 dea:InternalRevenueServiceMember us-gaap:AccountingStandardsUpdate201409Member 2021-04-01 2021-06-30 0001622194 dea:InternalRevenueServiceMember us-gaap:AccountingStandardsUpdate201409Member 2022-01-01 2022-06-30 0001622194 dea:InternalRevenueServiceMember us-gaap:AccountingStandardsUpdate201409Member 2021-01-01 2021-06-30 0001622194 dea:UnitedStatesCoastGuardMember us-gaap:AccountingStandardsUpdate201409Member 2022-01-01 2022-06-30 0001622194 dea:PatentAndTrademarkOfficeMember us-gaap:AccountingStandardsUpdate201409Member 2022-04-01 2022-06-30 0001622194 dea:PatentAndTrademarkOfficeMember us-gaap:AccountingStandardsUpdate201409Member 2022-01-01 2022-06-30 0001622194 dea:GeneralServicesAdministrationMember us-gaap:AccountingStandardsUpdate201409Member 2022-04-01 2022-06-30 0001622194 dea:GeneralServicesAdministrationMember us-gaap:AccountingStandardsUpdate201409Member 2022-01-01 2022-06-30 0001622194 dea:GeneralServicesAdministrationMember us-gaap:AccountingStandardsUpdate201409Member 2021-01-01 2021-06-30 0001622194 dea:TheJudiciaryOfTheUnitedStatesGovernmentMember us-gaap:AccountingStandardsUpdate201409Member 2021-04-01 2021-06-30 0001622194 dea:TheJudiciaryOfTheUnitedStatesGovernmentMember us-gaap:AccountingStandardsUpdate201409Member 2022-01-01 2022-06-30 0001622194 dea:TheJudiciaryOfTheUnitedStatesGovernmentMember us-gaap:AccountingStandardsUpdate201409Member 2021-01-01 2021-06-30 0001622194 dea:HealthResourcesAndServicesAdministrationMember us-gaap:AccountingStandardsUpdate201409Member 2022-01-01 2022-06-30 0001622194 dea:HealthResourcesAndServicesAdministrationMember us-gaap:AccountingStandardsUpdate201409Member 2021-01-01 2021-06-30 0001622194 dea:DepartmentOfEnergyMember us-gaap:AccountingStandardsUpdate201409Member 2021-04-01 2021-06-30 0001622194 dea:DepartmentOfEnergyMember us-gaap:AccountingStandardsUpdate201409Member 2021-01-01 2021-06-30 0001622194 dea:EnvironmentalProtectionAgencyMember us-gaap:AccountingStandardsUpdate201409Member 2021-04-01 2021-06-30 0001622194 dea:EnvironmentalProtectionAgencyMember us-gaap:AccountingStandardsUpdate201409Member 2021-01-01 2021-06-30 0001622194 dea:DepartmentOfTransportationMember us-gaap:AccountingStandardsUpdate201409Member 2021-01-01 2021-06-30 0001622194 dea:MilitaryEntranceProcessingCommandMember us-gaap:AccountingStandardsUpdate201409Member 2021-01-01 2021-06-30 0001622194 dea:FederalEmergencyManagementAgencyMember us-gaap:AccountingStandardsUpdate201409Member 2021-01-01 2021-06-30 0001622194 dea:BureauOfFiscalServiceMember us-gaap:AccountingStandardsUpdate201409Member 2021-01-01 2021-06-30 0001622194 us-gaap:AccountingStandardsUpdate201409Member 2022-04-01 2022-06-30 0001622194 us-gaap:AccountingStandardsUpdate201409Member 2021-04-01 2021-06-30 0001622194 us-gaap:AccountingStandardsUpdate201409Member 2022-01-01 2022-06-30 0001622194 us-gaap:AccountingStandardsUpdate201409Member 2021-01-01 2021-06-30 0001622194 us-gaap:AccountingStandardsUpdate201409Member 2022-06-30 0001622194 us-gaap:AccountingStandardsUpdate201409Member 2021-12-31 0001622194 us-gaap:AccountingStandardsUpdate201409Member dea:GSABuffaloMember dea:ParkingGarageMember 2022-04-01 2022-06-30 0001622194 us-gaap:AccountingStandardsUpdate201409Member dea:GSABuffaloMember dea:ParkingGarageMember 2022-01-01 2022-06-30 0001622194 us-gaap:AccountingStandardsUpdate201409Member dea:GSABuffaloMember dea:ParkingGarageMember 2021-04-01 2021-06-30 0001622194 us-gaap:AccountingStandardsUpdate201409Member dea:GSABuffaloMember dea:ParkingGarageMember 2021-01-01 2021-06-30 0001622194 us-gaap:AccountingStandardsUpdate201409Member dea:GSABuffaloMember dea:ParkingGarageMember 2022-06-30 0001622194 us-gaap:AccountingStandardsUpdate201409Member dea:GSABuffaloMember dea:ParkingGarageMember 2021-12-31 0001622194 us-gaap:AccountingStandardsUpdate201409Member dea:COVID19PandemicMember 2022-04-01 2022-06-30 0001622194 us-gaap:AccountingStandardsUpdate201409Member dea:COVID19PandemicMember 2022-01-01 2022-06-30 0001622194 us-gaap:AccountingStandardsUpdate201409Member dea:COVID19PandemicMember 2021-04-01 2021-06-30 0001622194 us-gaap:AccountingStandardsUpdate201409Member dea:COVID19PandemicMember 2021-01-01 2021-06-30 0001622194 us-gaap:AccountingStandardsUpdate201409Member dea:COVID19PandemicMember srt:MaximumMember 2022-06-30 0001622194 us-gaap:AccountingStandardsUpdate201409Member dea:COVID19PandemicMember 2021-12-31 0001622194 dea:DomesticGovernmentMember us-gaap:SalesRevenueNetMember us-gaap:CustomerConcentrationRiskMember 2022-01-01 2022-06-30 0001622194 dea:NonGovernmentalTenantsMember us-gaap:SalesRevenueNetMember us-gaap:CustomerConcentrationRiskMember 2022-01-01 2022-06-30 0001622194 stpr:CA 2022-06-30 0001622194 us-gaap:WhollyOwnedPropertiesMember 2022-06-30 0001622194 stpr:CA us-gaap:CustomerConcentrationRiskMember us-gaap:SalesRevenueNetMember 2022-01-01 2022-06-30 0001622194 stpr:CA us-gaap:CustomerConcentrationRiskMember dea:RentableSquareFeetMember 2022-01-01 2022-06-30 0001622194 dea:JVPartnerMember 2021-01-01 2021-06-30 0001622194 us-gaap:SubsequentEventMember 2022-07-14 0001622194 us-gaap:SubsequentEventMember 2022-07-14 2022-07-14

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2022

OR

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                      to                     

Commission file number: 001-36834

 

EASTERLY GOVERNMENT PROPERTIES, INC.

(Exact Name of Registrant as Specified in Its Charter)

 

 

Maryland

 

47-2047728

(State of Incorporation)

 

(IRS Employer Identification No.)

 

 

 

2001 K Street NW, Suite 775 North, Washington, D.C.

 

20006

(Address of Principal Executive Offices)

 

(Zip Code)

(202) 595-9500

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading

Symbol(s)

Name of each exchange on which registered

Common Stock

DEA

New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes      No  

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes      No  

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer

 

Accelerated filer

Non-accelerated filer

Smaller reporting company

 

 

 

 

Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.    

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).    Yes      No  

As of July 26, 2022, the registrant had 90,816,622 shares of common stock, $0.01 par value per share, outstanding.

 

 

 

 


 

 

INDEX TO FINANCIAL STATEMENTS

 

 

Page

Part I: Financial Information

 

 

 

   Item 1: Financial Statements:

 

Consolidated Financial Statements

 

 

 

Consolidated Balance Sheets as of June 30, 2022 and December 31, 2021 (unaudited)

1

 

 

Consolidated Statements of Operations for the Three and Six Months Ended June 30, 2022 and 2021 (unaudited)

2

 

 

Consolidated Statements of Comprehensive Income for the Three and Six Months Ended June 30, 2022 and 2021 (unaudited)

3

 

 

Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2022 and 2021 (unaudited)

4

 

 

Notes to the Consolidated Financial Statements

6

 

 

   Item 2: Management’s Discussion and Analysis of Financial Condition and Results of Operations

22

 

 

   Item 3: Quantitative and Qualitative Disclosures About Market Risk

39

 

 

   Item 4: Controls and Procedures

39

 

 

Part II: Other Information

 

 

 

   Item 1: Legal Proceedings

41

 

 

   Item 1A: Risk Factors

41

 

 

   Item 2: Unregistered Sales of Equity Securities and Use of Proceeds

41

 

 

   Item 3: Defaults Upon Senior Securities

41

 

 

   Item 4: Mine Safety Disclosures

41

 

 

   Item 5: Other Information

41

 

 

   Item 6: Exhibits

42

 

 

Signatures

 

 

 

 

 

 

 

 

 

 

 

 


 

 

Easterly Government Properties, Inc.

Consolidated Balance Sheets (unaudited)

(Amounts in thousands, except share amounts)

 

 

 

June 30, 2022

 

 

December 31, 2021

 

Assets

 

 

 

 

 

 

 

 

Real estate properties, net

 

$

2,464,280

 

 

$

2,399,188

 

Cash and cash equivalents

 

 

8,259

 

 

 

11,132

 

Restricted cash

 

 

9,785

 

 

 

9,011

 

Tenant accounts receivable

 

 

57,120

 

 

 

58,733

 

Investment in unconsolidated real estate venture

 

 

182,343

 

 

 

131,840

 

Intangible assets, net

 

 

183,088

 

 

 

186,307

 

Interest rate swaps

 

 

2,710

 

 

 

 

Prepaid expenses and other assets

 

 

33,465

 

 

 

29,901

 

Total assets

 

$

2,941,050

 

 

$

2,826,112

 

 

 

 

 

 

 

 

 

 

Liabilities

 

 

 

 

 

 

 

 

Revolving credit facility

 

 

142,750

 

 

 

14,500

 

Term loan facilities, net

 

 

248,779

 

 

 

248,579

 

Notes payable, net

 

 

695,819

 

 

 

695,589

 

Mortgage notes payable, net

 

 

249,450

 

 

 

252,421

 

Intangible liabilities, net

 

 

20,257

 

 

 

19,718

 

Deferred revenue

 

 

85,756

 

 

 

87,134

 

Interest rate swaps

 

 

 

 

 

5,700

 

Accounts payable, accrued expenses and other liabilities

 

 

56,244

 

 

 

60,890

 

Total liabilities

 

 

1,499,055

 

 

 

1,384,531

 

 

 

 

 

 

 

 

 

 

Equity

 

 

 

 

 

 

 

 

Common stock, par value $0.01, 200,000,000 shares authorized,

  90,816,622 and 90,147,868 shares issued and outstanding at

   June 30, 2022 and December 31, 2021, respectively

 

 

908

 

 

 

901

 

Additional paid-in capital

 

 

1,621,288

 

 

 

1,604,712

 

Retained earnings

 

 

76,561

 

 

 

62,023

 

Cumulative dividends

 

 

(427,851

)

 

 

(379,895

)

Accumulated other comprehensive income (loss)

 

 

2,393

 

 

 

(5,072

)

Total stockholders’ equity

 

 

1,273,299

 

 

 

1,282,669

 

Non-controlling interest in Operating Partnership

 

 

168,696

 

 

 

158,912

 

Total equity

 

 

1,441,995

 

 

 

1,441,581

 

Total liabilities and equity

 

$

2,941,050

 

 

$

2,826,112

 

 

The accompanying notes are an integral part of these consolidated financial statements.

1

 


 

Easterly Government Properties, Inc.

Consolidated Statements of Operations (unaudited)

(Amounts in thousands, except share and per share amounts)

 

 

 

For the three months ended June 30,

 

 

For the six months ended June 30,

 

 

 

2022

 

 

2021

 

 

2022

 

 

2021

 

Revenues

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Rental income

 

$

71,156

 

 

$

66,095

 

 

$

141,595

 

 

$

130,274

 

Tenant reimbursements

 

 

916

 

 

 

1,899

 

 

 

2,060

 

 

 

2,219

 

Asset management income

 

 

317

 

 

 

 

 

 

565

 

 

 

 

Other income

 

 

368

 

 

 

620

 

 

 

839

 

 

 

1,122

 

Total revenues

 

 

72,757

 

 

 

68,614

 

 

 

145,059

 

 

 

133,615

 

Expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Property operating

 

 

15,551

 

 

 

14,296

 

 

 

31,009

 

 

 

26,390

 

Real estate taxes

 

 

7,851

 

 

 

7,553

 

 

 

15,677

 

 

 

14,839

 

Depreciation and amortization

 

 

24,343

 

 

 

22,525

 

 

 

48,502

 

 

 

44,850

 

Acquisition costs

 

 

302

 

 

 

483

 

 

 

664

 

 

 

970

 

Corporate general and administrative

 

 

5,966

 

 

 

5,768

 

 

 

11,949

 

 

 

11,576

 

Total expenses

 

 

54,013

 

 

 

50,625

 

 

 

107,801

 

 

 

98,625

 

Other income (expense)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income from unconsolidated real estate venture

 

 

825

 

 

 

 

 

 

1,456

 

 

 

 

Interest expense, net

 

 

(11,439

)

 

 

(9,265

)

 

 

(22,321

)

 

 

(18,386

)

Gain on the sale of operating property

 

 

 

 

 

530

 

 

 

 

 

 

530

 

Net income

 

 

8,130

 

 

 

9,254

 

 

 

16,393

 

 

 

17,134

 

Non-controlling interest in Operating Partnership

 

 

(933

)

 

 

(1,053

)

 

 

(1,855

)

 

 

(1,942

)

Net income available to Easterly Government

   Properties, Inc.

 

$

7,197

 

 

$

8,201

 

 

$

14,538

 

 

$

15,192

 

Net income available to Easterly Government

   Properties, Inc. per share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

0.08

 

 

$

0.10

 

 

$

0.16

 

 

$

0.18

 

Diluted

 

$

0.08

 

 

$

0.10

 

 

$

0.16

 

 

$

0.18

 

Weighted-average common shares outstanding

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

90,751,351

 

 

 

83,817,680

 

 

 

90,452,594

 

 

 

82,973,705

 

Diluted

 

 

91,083,980

 

 

 

84,247,285

 

 

 

90,799,647

 

 

 

83,398,931

 

Dividends declared per common share

 

$

0.265

 

 

$

0.260

 

 

$

0.530

 

 

$

0.520

 

 

The accompanying notes are an integral part of these consolidated financial statements.

2

 


 

Easterly Government Properties, Inc.

Consolidated Statements of Comprehensive Income (unaudited)

(Amounts in thousands)

 

 

 

For the three months ended June 30,

 

 

For the six months ended June 30,

 

 

 

2022

 

 

2021

 

 

2022

 

 

2021

 

Net income

 

$

8,130

 

 

$

9,254

 

 

$

16,393

 

 

$

17,134

 

Other comprehensive income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Unrealized gain on interest rate swaps, net

 

 

2,903

 

 

 

1,257

 

 

 

8,410

 

 

 

3,095

 

Other comprehensive income

 

 

2,903

 

 

 

1,257

 

 

 

8,410

 

 

 

3,095

 

Comprehensive income

 

 

11,033

 

 

 

10,511

 

 

 

24,803

 

 

 

20,229

 

Non-controlling interest in Operating Partnership

 

 

(933

)

 

 

(1,053

)

 

 

(1,855

)

 

 

(1,942

)

Other comprehensive income attributable to

   non-controlling interest

 

 

(338

)

 

 

(55

)

 

 

(945

)

 

 

(283

)

Comprehensive income attributable to

   Easterly Government Properties, Inc.

 

$

9,762

 

 

$

9,403

 

 

$

22,003

 

 

$

18,004

 

 

The accompanying notes are an integral part of these consolidated financial statements.

 

3

 


 

 

Easterly Government Properties, Inc.

Consolidated Statements of Cash Flows (unaudited)

(Amounts in thousands)

 

 

 

For the six months ended June 30,

 

 

 

2022

 

 

2021

 

Cash flows from operating activities

 

 

 

 

 

 

 

 

Net income

 

$

16,393

 

 

$

17,134

 

Adjustments to reconcile net income to net cash provided by operating activities

 

 

 

 

 

 

 

 

Depreciation and amortization

 

 

48,502

 

 

 

44,850

 

Straight line rent

 

 

(531

)

 

 

(2,737

)

Income from unconsolidated real estate venture

 

 

(1,456

)

 

 

 

Amortization of above- / below-market leases

 

 

(1,604

)

 

 

(2,511

)

Amortization of unearned revenue

 

 

(2,841

)

 

 

(2,819

)

Amortization of loan premium / discount

 

 

(563

)

 

 

(38

)

Amortization of deferred financing costs

 

 

1,022

 

 

 

765

 

Amortization of lease inducements

 

 

428

 

 

 

430

 

Gain on the sale of operating property

 

 

 

 

 

(530

)

Distributions from investment in unconsolidated real estate venture

 

 

3,369

 

 

 

 

Non-cash compensation

 

 

3,266

 

 

 

2,367

 

Other

 

 

 

 

 

7

 

Net change in:

 

 

 

 

 

 

 

 

Tenant accounts receivable

 

 

2,712

 

 

 

(781

)

Prepaid expenses and other assets

 

 

(1,510

)

 

 

(7,587

)

Deferred revenue associated with operating leases

 

 

1,464

 

 

 

746

 

Principal payments on operating lease obligations

 

 

(195

)

 

 

(44

)

Accounts payable, accrued expenses and other liabilities

 

 

(4,102

)

 

 

7,465

 

Net cash provided by operating activities

 

 

64,354

 

 

 

56,717

 

Cash flows from investing activities

 

 

 

 

 

 

 

 

Real estate acquisitions and deposits

 

 

(78,771

)

 

 

(93,037

)

Additions to operating properties

 

 

(10,891

)

 

 

(9,573

)

Additions to development properties

 

 

(4,949

)

 

 

(4,518

)

Proceeds from sale of operating property, net

 

 

 

 

 

3,326

 

Distributions from investment in unconsolidated real estate venture

 

 

304

 

 

 

 

Investment in unconsolidated real estate venture

 

 

(52,721

)

 

 

 

Net cash used in investing activities

 

 

(147,028

)

 

 

(103,802

)

Cash flows from financing activities

 

 

 

 

 

 

 

 

Payment of deferred financing costs

 

 

 

 

 

(81

)

Issuance of common shares

 

 

9,504

 

 

 

40,403

 

Credit facility draws

 

 

157,250

 

 

 

125,250

 

Credit facility repayments

 

 

(29,000

)

 

 

(67,250

)

Repayments of mortgage notes payable

 

 

(2,628

)

 

 

(1,886

)

Dividends and distributions paid

 

 

(54,415

)

 

 

(48,777

)

Payment of offering costs

 

 

(136

)

 

 

(565

)

Net cash provided by financing activities

 

 

80,575

 

 

 

47,094

 

Net increase (decrease) in Cash and cash equivalents and Restricted cash

 

 

(2,099

)

 

 

9

 

Cash and cash equivalents and Restricted cash, beginning of period

 

 

20,143

 

 

 

14,669

 

Cash and cash equivalents and Restricted cash, end of period

 

$

18,044

 

 

$

14,678

 

 

The accompanying notes are an integral part of these consolidated financial statements.

 

4

 


 

 

Easterly Government Properties, Inc.

Consolidated Statements of Cash Flows (unaudited)

(Amounts in thousands)

 

Supplemental disclosure of cash flow information is as follows:

 

 

 

For the six months ended June 30,

 

 

 

2022

 

 

2021

 

Cash paid for interest, net of capitalized interest

 

$

21,766

 

 

$

17,671

 

Supplemental disclosure of non-cash information

 

 

 

 

 

 

 

 

Additions to operating properties accrued, not paid

 

$

1,207

 

 

$

2,417

 

Additions to development properties accrued, not paid

 

 

2,534

 

 

 

1,330

 

Financing costs accrued, not paid

 

 

 

 

 

77

 

Offering costs accrued, not paid

 

 

 

 

 

166

 

Deferred asset acquisition costs accrued, not paid

 

 

128

 

 

 

291

 

Contingent consideration accrued, not paid

 

 

 

 

 

336

 

Unrealized gain on interest rate swaps, net

 

 

8,410

 

 

 

3,095

 

Properties acquired for Common Units

 

 

17,361

 

 

 

20,790

 

Recognition of operating lease right-of-use assets

 

 

101

 

 

 

 

Recognition of liabilities related to operating lease right-of-use assets

 

 

101

 

 

 

 

Exchange of Common Units for Shares of Common Stock

 

 

 

 

 

 

 

 

Non-controlling interest in Operating Partnership

 

$

(2,911

)

 

$

(3,424

)

Common stock

 

 

2

 

 

 

2

 

Additional paid-in capital

 

 

2,909

 

 

 

3,422

 

Total

 

$

 

 

$

 

 

The accompanying notes are an integral part of these consolidated financial statements.

5

 


 

Easterly Government Properties, Inc.

Notes to the Consolidated Financial Statements (unaudited)

1. Organization and Basis of Presentation

The information contained in the following notes to the consolidated financial statements is condensed from that which would appear in the annual consolidated financial statements; accordingly, the consolidated financial statements included herein should be reviewed in conjunction with the consolidated financial statements for the fiscal year ended December 31, 2021, and related notes thereto, included in the Annual Report on Form 10-K of Easterly Government Properties, Inc. (the “Company”) for the year ended  December 31, 2021 filed with the U.S. Securities and Exchange Commission (the “SEC”) on February 28, 2022.

The Company is a Maryland corporation that has elected to be taxed as a real estate investment trust (“REIT”) under the Internal Revenue Code of 1986, as amended (the “Code”), commencing with its taxable year ended December 31, 2015. The operations of the Company are carried on primarily through Easterly Government Properties LP (the “Operating Partnership”) and the wholly owned subsidiaries of the Operating Partnership. As used herein, the “Company,” “we,” “us,” or “our” refer to Easterly Government Properties, Inc. and its consolidated subsidiaries and partnerships, including the Operating Partnership, except where context otherwise requires.

We are an internally managed REIT, focused primarily on the acquisition, development, and management of Class A commercial properties that are leased to U.S. Government agencies that serve essential functions. We generate substantially all of our revenue by leasing our properties to such agencies, either directly or through the U.S. General Services Administration (“GSA”). Our objective is to generate attractive risk-adjusted returns for our stockholders over the long-term through dividends and capital appreciation.

We focus on acquiring, developing and managing U.S. Government leased properties that are essential to supporting the mission of the tenant agency and strive to be a partner of choice for the U.S. Government, working closely with the tenant agency to meet its needs and objectives. As of June 30, 2022, we wholly owned 87 operating properties and six operating properties through an unconsolidated joint venture (the “JV”) in the United States, encompassing approximately 9.0 million leased square feet, including 92 operating properties that were leased primarily to U.S. Government tenant agencies and one operating property that was entirely leased to a private tenant. As of June 30, 2022, our operating properties were 99% leased. For purposes of calculating percentage leased, we exclude from the denominator total square feet that was unleased and to which we attributed no value at the time of acquisition. In addition, we wholly owned one property under development that we expect will encompass approximately 0.2 million leased square feet upon completion.

The Operating Partnership holds substantially all of our assets and conducts substantially all of our business. We are the sole general partner of the Operating Partnership. We owned approximately 88.3% of the aggregate limited partnership interests in the Operating Partnership (“common units”) at June 30, 2022. We believe that we have operated and have been organized in conformity with the requirements for qualification and taxation as a REIT for U.S. federal income tax purposes commencing with our taxable year ended December 31, 2015.

Principles of Consolidation

The accompanying consolidated financial statements are presented on the accrual basis of accounting in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and include the accounts of the Company, Easterly Government Properties TRS, LLC, Easterly Government Services, LLC, the Operating Partnership and its other subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation.

Basis of Presentation

The condensed consolidated financial statements included herein are unaudited; however, they include all adjustments (consisting only of normal recurring adjustments) which, in the opinion of management, are necessary to state fairly the consolidated financial position of the Company at June 30, 2022 and December 31, 2021, the consolidated results of operations for the three and six months ended June 30, 2022 and 2021, and the consolidated cash flows for the six months ended June 30, 2022 and 2021. The year-end condensed consolidated balance sheet data was derived from audited financial statements but does not include all disclosures required by GAAP. The results of operations for the interim periods presented are not necessarily indicative of the results to be expected for the full year.

The preparation of the consolidated financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosures of contingent assets and liabilities at the date of the balance sheet, and the reported amounts of revenues and expenses during the reporting period. We base our estimates on historical experience and on various

6

 


 

other assumptions that are believed to be reasonable under the circumstances, including the impact of extraordinary events such as the novel coronavirus (COVID-19) pandemic, the results of which form the basis for making judgements about carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

 

 

2. Summary of Significant Accounting Policies

The significant accounting policies used in the preparation of the Company’s condensed consolidated financial statements are disclosed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021. 

Reclassifications

Certain prior year amounts have been reclassified to conform to the current year presentation.

3. Real Estate and Intangibles 

Acquisitions

During the six months ended June 30, 2022, we acquired two operating properties in asset acquisitions, FBI – Tampa and NARA – Broomfield for an aggregate purchase price of $93.1 million. We allocated the aggregate purchase price of these acquisitions based on the estimated fair values of the acquired assets and assumed liabilities as follows (amounts in thousands):

 

 

 

Total

 

Real estate

 

 

 

 

Land

 

$

9,003

 

Building

 

 

75,874

 

Acquired tenant improvements

 

 

932

 

Total real estate

 

 

85,809

 

Intangible assets

 

 

 

 

In-place leases

 

 

6,450

 

Acquired leasing commissions

 

 

3,686

 

Total intangible assets

 

 

10,136

 

Intangible liabilities

 

 

 

 

Below-market leases

 

 

(2,858

)

Total intangible liabilities

 

 

(2,858

)

Purchase price

 

$

93,087

 

 

The intangible assets and liabilities of operating properties acquired during the six months ended June 30, 2022 have a weighted average amortization period of 13.7 years as of June 30, 2022. During the six months ended June 30, 2022, we included $1.0 million of revenues and $0.4 million of net income in our Consolidated Statements of Operations related to the operating properties acquired.

During the six months ended June 30, 2022, we incurred $0.7 million of acquisition-related expenses mainly consisting of internal costs associated with property acquisitions and future acquisitions.

7

 


 

Consolidated Real Estate and Intangibles

Real estate and intangibles consisted of the following as of June 30, 2022 (amounts in thousands):

 

 

Total

 

Real estate properties, net

 

 

 

 

Land

 

$

231,842

 

Building and improvements

 

 

2,418,590

 

Acquired tenant improvements

 

 

90,950

 

Construction in progress

 

 

35,467

 

Accumulated depreciation

 

 

(312,569

)

Total Real estate properties, net

 

 

2,464,280

 

Intangible assets, net

 

 

 

 

In-place leases

 

 

292,175

 

Acquired leasing commissions

 

 

75,199

 

Above market leases

 

 

17,541

 

Payment in lieu of taxes