UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): |
(Exact name of Registrant as Specified in Its Charter)
(State or Other Jurisdiction |
(Commission File Number) |
(IRS Employer |
||
|
|
|
|
|
|
||||
|
||||
(Address of Principal Executive Offices) |
|
(Zip Code) |
||
Registrant’s Telephone Number, Including Area Code: |
(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
Securities registered pursuant to Section 12(b) of the Act:
|
|
Trading |
|
|
|
|
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§ 230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§ 240.12b-2 of this chapter).
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. ☐
Item 1.01 Entry into a Material Definitive Agreement.
As previously reported, on September 30, 2021, Easterly Government Properties LP (the “Operating Partnership”), the operating partnership of Easterly Government Properties, Inc. (the “Company”), entered into a purchase and sale agreement (the “Purchase Agreement”) with certain affiliates of US Federal Properties Co., LLC (collectively, the “Sellers”) to acquire a portfolio of ten properties (the “Portfolio Acquisition”) 100% leased to the Department of Veterans Affairs (VA) for an aggregate contractual purchase price of approximately $635.6 million. On October 8, 2021, the Operating Partnership assigned the Purchase Agreement to the Company’s joint venture (the “JV”), which serves as the acquisition vehicle for the Portfolio Acquisition. As of the date of this Current Report Form 8-K, the JV has closed on eight of the ten properties included in the Portfolio Acquisition.
On August 17, 2023, the JV entered into a seventh amendment to the Purchase Agreement (the “PSA Amendment”) with the Sellers. The PSA Amendment (i) reduces the aggregate contractual purchase price set forth in the Purchase Agreement to approximately $619.7 million and (ii) modifies the terms for calculating the purchase price adjustment in connection with the closing of the remaining two Portfolio Acquisition properties.
There can be no assurance that the closing conditions for the remaining Portfolio Acquisition properties will be satisfied, or that defaults or other events will not delay or prevent the closing of one or both of the remaining Portfolio Acquisition properties. Further, there can be no assurance that the closing of the remaining two Portfolio Acquisition properties will occur on the contemplated terms, or at all.
The foregoing summary of the PSA Amendment does not purport to be complete and is subject to, and qualified in its entirety by, the full text of the PSA Amendment, a copy of which is filed as Exhibit 10.1 to this Current Report on Form 8-K and is incorporated herein by reference.
Forward-Looking Statements
This Current Report on Form 8-K contains forward-looking statements within the meaning of federal securities laws and regulations. These forward-looking statements are identified by their use of terms and phrases such as “believe,” “expect,” “intend,” “project,” “anticipate,” “position,” and other similar terms and phrases, including references to assumptions and forecasts of future results. Forward-looking statements are not guarantees of future performance and involve known and unknown risks, uncertainties and other factors which may cause the actual results to differ materially from those anticipated at the time the forward-looking statements are made. These risks include, but are not limited to, risks relating to the ability of the JV to close on one or both of the remaining Portfolio Acquisition properties on the proposed terms and schedule or at all; and those risks and uncertainties associated with the Company’s business described from time to time in its filings with the Securities and Exchange Commission, including its Annual Report on Form 10-K filed on February 28, 2023. Although the Company believes the expectations reflected in such forward-looking statements are based upon reasonable assumptions, the Company can give no assurance that the expectations will be attained or that any deviation will not be material. All information in this Current Report on Form 8-K is as of the date of this Current Report on Form 8-K, and the Company undertakes no obligation to update any forward-looking statement to conform the statement to actual results or changes in its expectations.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits:
Exhibit Number |
Description |
10.1 |
|
104 |
Cover Page Interactive Data File (embedded within the inline XBRL document.) |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
|
|
EASTERLY GOVERNMENT PROPERTIES, INC. |
|
|
|||
Date: August 23, 2023 |
|
By: |
/s/ William C. Trimble, III |
|
|
Name: |
William C. Trimble, III |
|
|
Title: |
Chief Executive Officer and President |
SEVENTH AMENDMENT TO PURCHASE AND SALE AGREEMENT
THIS SEVENTH AMENDMENT TO PURCHASE AND SALE AGREEMENT (this “Amendment”) is made and entered into effective as of August 17, 2023 (the “Effective Date”), by and among the entities listed on Exhibit A attached hereto (each, a “Seller” and collectively, the “Sellers”), and EGP MEDBASE REIT LLC, a Delaware limited liability company (“Purchaser”).
R E C I T A L S:
WHEREAS, Sellers and Purchaser (as successor by assignment from Easterly Government Properties LP, a Delaware limited partnership) entered into that certain Purchase and Sale Agreement dated as of September 30, 2021, as amended by that certain First Amendment to Purchase and Sale Agreement dated as of October 12, 2021, that certain Second Amendment to Purchase and Sale Agreement dated as of November 1, 2021, that certain Third Amendment to Purchase and Sale Agreement dated as of December 21, 2021, that certain Fourth Amendment to Purchase and Sale Agreement dated as of December 21, 2021, that certain Fifth Amendment to Purchase and Sale Agreement dated as of November 14, 2022. and as further amended by that certain Sixth Amendment to Purchase and Sale Agreement dated as of April 10, 2023 (collectively, the “Purchase Agreement”);
WHEREAS, pursuant to the Purchase Agreement, Sellers agreed to sell to Purchaser, and Purchaser agreed to buy from Sellers, the Membership Interests in the Companies set forth next to such Seller’s name on Exhibit A to the Purchase Agreement; and
WHEREAS, Sellers and Purchaser desire to further amend the Purchase Agreement to set forth certain agreements of the parties as more particularly set forth herein.
NOW, THEREFORE, in consideration of the terms, conditions and covenants contained in the Purchase Agreement and in this Amendment, and of other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Sellers and Purchaser agree as follows:
(b) On or prior to the last Business Day of the thirteenth (13th) full calendar month following each Stabilization Date for a Property (each, a “Purchase Price Adjustment
Date”), Purchaser and the applicable Seller shall adjust the Purchase Price paid for the Membership Interests of the Company that owns such Property pursuant to this Section 2.4(b), provided that if as of an applicable Purchase Price Adjustment Date all information necessary to calculate Operating Income with respect to the applicable Property is not available, such Purchase Price Adjustment Date shall be extended to the date on which all such information is available. The projected stabilized Operating Income for the first full twelve-month period following the Stabilization Date for each Property is set forth on Schedule 2.4(b) attached hereto and made a part hereof (each, a “Stabilized Operating Income”). With the exception of the Corpus Christi Company and the Jacksonville Company, each Purchase Price was determined using the Stabilized Operating Income for the applicable Property and a capitalization rate of five and one-quarter percent (5.25%), while the Purchase Price for the Corpus Christi Company and the Jacksonville Company was determined using the Stabilized Operating Income for the applicable Property and a capitalization rate of six percent (6.0%) (the “Cap Rate” means 5.25% for each Purchase Price except for the Corpus Christi Company and the Jacksonville Company; the “Cap Rate” for the Purchase Price for the Corpus Christi Company and the Jacksonville Company means 6.0%). On or prior to each Purchase Price Adjustment Date, the actual Operating Income for the applicable Property shall be determined for the first full twelve (12) month period following the Stabilization Date for such Property (each, a “Stabilization Period” and the actual Operating Income for such period being the “Actual Operating Income”). In the event that the Actual Operating Income is less than the Stabilized Operating Income set forth on Schedule 2.4(b) for such Property, the Purchase Price for such Property shall be reduced by an amount equal to the quotient of (i) (x) the positive difference between the Stabilized Operating Income and the Actual Operating Income, divided by (ii) the Cap Rate, and the applicable Seller shall pay to Purchaser the amount as so determined within fifteen (15) days following the date of such determination. In the event that the Actual Operating Income is more than the Stabilized Operating Income set forth on Schedule 2.4(b) for such Property, the Purchase Price for such Property shall be increased by an amount equal to the quotient of (i) (x) the positive difference between the Actual Operating Income and the Stabilized Operating Income, divided by (ii) the Cap Rate, and Purchaser shall pay to the applicable Seller the amount as so determined within fifteen (15) days following the date of such determination. The provisions of this Section 2.4(b) shall survive Closing.
[SIGNATURES ON NEXT PAGE]
IN WITNESS WHEREOF, the parties hereto have duly executed this Amendment as of the Effective Date.
SELLERS:
BIRMINGHAM VA MANAGING MEMBER LLC,
a Delaware limited liability company
|
|
|
|
By: |
/s/ Kevin T. Kelly |
|
Name: |
Kevin T. Kelly |
|
Title: |
Manager |
CHATTANOOGA VA MANAGING MEMBER LLC,
a Delaware limited liability company
|
|
|
|
By: |
/s/ Kevin T. Kelly |
|
Name: |
Kevin T. Kelly |
|
Title: |
Manager |
COLUMBUS VA MANAGING MEMBER LLC,
a Delaware limited liability company
|
|
|
|
By: |
/s/ Kevin T. Kelly |
|
Name: |
Kevin T. Kelly |
|
Title: |
Manager |
CORPUS CHRISTI VA MANAGING MEMBER LLC,
a Delaware limited liability company
|
|
|
|
By: |
/s/ Kevin T. Kelly |
|
Name: |
Kevin T. Kelly |
|
Title: |
Manager |
JACKSONVILLE VA OPC MANAGING MEMBER LLC,
a Delaware limited liability company
|
|
|
|
By: |
/s/ Kevin T. Kelly |
|
Name: |
Kevin T. Kelly |
|
Title: |
Manager |
JOHNSON COUNTY VA MANAGING MEMBER LLC,
a Delaware limited liability company
|
|
|
|
By: |
/s/ Kevin T. Kelly |
|
Name: |
Kevin T. Kelly |
|
Title: |
Manager |
LUBBOCK VA MANAGING MEMBER LLC,
a Delaware limited liability company
|
|
|
|
By: |
/s/ Kevin T. Kelly |
|
Name: |
Kevin T. Kelly |
|
Title: |
Manager |
COBB COUNTY VA MANAGING MEMBER LLC,
a Delaware limited liability company
|
|
|
|
By: |
/s/ Kevin T. Kelly |
|
Name: |
Kevin T. Kelly |
|
Title: |
Manager |
PHOENIX VA MANAGING MEMBER LLC,
a Delaware limited liability company
|
|
|
|
By: |
/s/ Kevin T. Kelly |
|
Name: |
Kevin T. Kelly |
|
Title: |
Manager |
SAN ANTONIO VA MANAGING MEMBER LLC,
a Delaware limited liability company
|
|
|
|
By: |
/s/ Kevin T. Kelly |
|
Name: |
Kevin T. Kelly |
|
Title: |
Manager |
[Signatures continue on following page.]
PURCHASER:
EGP MEDBASE REIT LLC,
a Delaware limited liability company
|
|
|
|
By: |
/s/ Andrew G. Pulliam |
|
Name: |
Andrew G. Pulliam |
|
Title: |
Executive Vice President |
SCHEDULE 2.3
ALLOCATION OF AGGREGATE PURCHASE PRICE
COMPANY |
ALLOCATED PURCHASE PRICE |
Birmingham Company |
$41,588,000 |
Chattanooga Company |
$58,336,000 |
Columbus Company |
$34,583,000 |
Corpus Christi Company |
$34,316,000 |
Jacksonville Company |
$77,247,000 |
Lenexa Company |
$17,799,000 |
Lubbock Company |
$45,977,000 |
Marietta Company |
$58,737,000 |
Phoenix Company |
$137,670,000 |
San Antonio Company |
$113,407,000 |
|
|
Aggregate Purchase Price |
$619,660,000 |