8-K
0001622194falseDC00016221942024-07-312024-07-31

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT

PURSUANT TO SECTION 13 or 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

Date of Report (Date of earliest event reported):

July 31, 2024

Easterly Government Properties, Inc.

(Exact name of Registrant as Specified in Its Charter)

Maryland

001-36834

47-2047728

(State or Other Jurisdiction

of Incorporation)

(Commission

File Number)

(IRS Employer

Identification No.)

 

 

 

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

20006

(Address of Principal Executive Offices)

(Zip Code)

Registrant’s Telephone Number, Including Area Code: (202) 595-9500

Not Applicable

(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 (see General Instructions A.2. below):

 

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

 

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 is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR §230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2).

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 2.02 Results of Operations and Financial Condition.

On July 31, 2024, we issued a press release announcing our results of operations for the second quarter ended June 30, 2024. A copy of this press release as well as a copy of our supplemental information package are available on our website and are attached hereto as Exhibits 99.1 and 99.2 and incorporated herein by reference. The information in this Item 2.02 as well as the attached Exhibits 99.1 and 99.2 are being furnished and shall not be deemed “filed” for any purpose, including for the purposes of Section 18 of the Securities and Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that Section, and shall not be deemed incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Exchange Act regardless of any general incorporation language in such filing.

We will host a webcast and conference call at 11:00 a.m. Eastern Time on July 31, 2024, to review our second quarter ended 2024 performance, discuss recent events and conduct a question-and-answer session. A live webcast will be available in the Investor Relations section of our website. Please note that the full text of the press release and supplemental information package are available through our website at ir.easterlyreit.com. The information contained on our website is not incorporated by reference herein.

Item 9.01 Financial Statements and Exhibits.

(d) Exhibits:

Exhibit Number

Description

99.1

Press Release dated July 31, 2024.

99.2

Easterly Government Properties, Inc. Supplemental Information Package for the quarter ended June 30, 2024.

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.

 

 

By:

/s/ Allison E. Marino

Name:

Allison E. Marino

Title:

Executive Vice President, Chief Financial Officer and Chief Accounting Officer

 

Date: July 31, 2024

 

 


EX-99.1

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Exhibit 99.1

 

 

EASTERLY GOVERNMENT PROPERTIES

REPORTS SECOND QUARTER 2024 RESULTS

 

WASHINGTON, D.C. – July 31, 2024 – Easterly Government Properties, Inc. (NYSE: DEA) (the “Company” or “Easterly”), a fully integrated real estate investment trust (“REIT”) focused primarily on the acquisition, development and management of Class A commercial properties leased to the U.S. Government, today announced its results of operations for the quarter ended June 30, 2024.

Highlights for the Quarter Ended June 30, 2024:

Net income of $4.9 million, or $0.04 per share on a fully diluted basis
Core FFO of $31.4 million, or $0.29 per share on a fully diluted basis
Used $8.4 million of available cash to extinguish the mortgage note obligation on VA - Golden
Executed a new $400.0 million senior unsecured revolving credit facility (the “Revolver”), which includes an accordion feature that allows the Company to request additional lender commitments of up to $300.0 million, for a total Revolver capacity of up to $700.0 million
Entered into a master note purchase agreement to issue an aggregate $200.0 million of 6.56% (ICUR9 + 210 basis point spread) 9-year fixed rate, senior unsecured notes in two tranches and issued $150.0 million of such senior notes with a maturity date of May 29, 2033
Acquired the land for the future development of a 50,777 rentable square foot Federal courthouse in Flagstaff, Arizona (“JUD - Flagstaff”) with a 20-year non-cancelable lease that will commence once the development is complete
Acquired a 135,200 square foot facility primarily leased to the Office of the Chief Information Officer (OCIO) and Office of Human Capital of the U.S. Immigration and Customs Enforcement (ICE), located near Dallas, Texas (“ICE - Dallas”) with a weighted average remaining lease term of 13.3 years at the time of acquisition
Acquired a 27,840 square foot facility 100% leased to Homeland Security Investigations (HSI), the principal investigation arm within the Department of Homeland Security (DHS), with a 15-year lease that does not expire until March 2036 (“HSI - Orlando”)
Acquired a 49,420 square foot facility in Orlando, Florida that is 100% leased to ICE with a 20-year lease that does not expire until August 2040 (“ICE - Orlando”)
Released the Company's 2023 Environmental, Social, and Governance report (the “ESG Report”), showcasing the Company’s progress in achieving its environmental and social-focused goals committed to in 2021
Issued an aggregate of 589,647 shares of the Company's common stock in settlement of previously entered into forward sales transactions through the Company's $300.0 million ATM Program launched in December 2019 (the “December 2019 ATM Program”) at a weighted average price per share of $13.40, raising net proceeds to the Company of approximately $7.9 million
Increased the Company's guidance for full-year 2024 Core FFO per share on a fully diluted basis to a range of $1.15 - $1.17

 


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“We occupy a unique place in the REIT industry,” said Darrell Crate, CEO of Easterly Government Properties. “The real estate we provide is essential to the U.S. Government and that mission criticality remains our definable edge and the bedrock of shareholder value.”

Financial Results for the Six Months Ended June 30, 2024:

Net income of $9.7 million, or $0.09 per share on a fully diluted basis

Core FFO of $62.1 million, or $0.58 per share on a fully diluted basis

Portfolio Operations

As of June 30, 2024, the Company or its joint venture (the “JV”) owned 93 operating properties in the United States encompassing approximately 9.1 million leased square feet, including 91 operating properties that were leased primarily to U.S. Government tenant agencies, one operating property leased primarily to tenant agencies of a high-credit state government, and one operating property that is entirely leased to a private tenant. In addition, the Company wholly owned two properties in development that the Company expects will encompass approximately 0.2 million rentable square feet upon completion. The first re-development project, located in Atlanta, Georgia, is currently under construction and, once complete, a 20-year lease with the U.S. General Services Administration (GSA) is expected to commence for the beneficial use of the U.S. Food and Drug Administration (FDA). The second project, located in Flagstaff, Arizona, is currently in design and, once complete, a 20-year lease with the GSA is expected to commence for the beneficial use of the United States Judiciary. As of June 30, 2024, the portfolio had a weighted average age of 14.8 years, based upon the date properties were built or renovated-to-suit, and had a weighted average remaining lease term of 10.1 years.

On April 22, 2024, the Company announced the release of its 2023 ESG Report, showcasing the Company’s progress in achieving its environmental and social-focused goals committed to in 2021. Easterly oversaw a 4% decrease in energy usage and achieved 16 ENERGY STAR Certifications. This emissions reduction equated to 3.7 million pounds of coal burned, or the electricity needed to power 667 homes for one year, and was achieved as a result of equipment upgrades and low-to-no-cost adjustments to optimize its buildings’ efficiency. The Company is committed to preserving the robust ESG advancements made in 2023 while furthering investments in the efficiency and sustainability of its portfolio, particularly in properties vital to government operations.

Balance Sheet and Capital Markets Activity

As of June 30, 2024, the Company had total indebtedness of approximately $1.4 billion comprised of $72.5 million outstanding on the Revolver, $100.0 million outstanding on its 2016 term loan facility, $175.0 million outstanding on its 2018 term loan facility, $850.0 million of senior unsecured notes, and $210.0 million of mortgage debt (excluding unamortized premiums and discounts and deferred financing fees). The Company's outstanding debt had a weighted average maturity of 4.9 years and a weighted average interest rate of 4.4%. Further, the Company's Net Debt to total enterprise value was 50.9% and its Adjusted Net Debt to annualized quarterly pro forma EBITDA ratio was 6.9x.

On April 1, 2024, the Company used $8.4 million of available cash to extinguish the mortgage note obligation on VA - Golden.

On May 30, 2024, the Company announced it had entered into a master note purchase agreement to issue an aggregate $200.0 million of 6.56% (ICUR9 + 210 basis point spread) 9-year fixed rate, senior unsecured notes consisting of: $150.0 million of Series A Senior Notes issued and sold by Easterly Government Properties LP, the Company’s operating partnership (the “Partnership”), on May 29, 2024; and $50.0 million of Series B Senior Notes to be issued and sold by the Partnership on or about August 14, 2024, subject to customary closing

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conditions. The Company, together with various subsidiaries of the Partnership, have guaranteed the Series A Senior Notes (and will guarantee the Series B Senior Notes, once issued).

On June 3, 2024, the Company executed a new $400.0 million Revolver. The Revolver includes an accordion feature that allows the Company to request additional lender commitments of up to $300.0 million, for a total Revolver capacity of up to $700.0 million. The Revolver has an initial four-year term and will mature in June 2028, with two six-month as-of-right extension options available to extend the maturity to June 2029, subject to certain conditions. Borrowings under the Revolver will bear interest at a rate of Adjusted SOFR plus a spread of 1.20% to 1.80%, depending on the Company’s leverage ratio. Given the Company's current leverage ratio, the initial spread to Adjusted SOFR was set at 1.35%.

 

Acquisitions

On April 4, 2024, the Company acquired the land to develop JUD - Flagstaff, a 50,777 square foot Federal courthouse in Flagstaff, Arizona. JUD - Flagstaff will be leased to the GSA for beneficial use of the Judiciary of the U.S. Government over a 20 year non-cancelable term.

On April 16, 2024, the Company announced the acquisition of ICE - Dallas, a 135,200 square foot facility primarily leased to the Office of the Chief Information Officer and Office of Human Capital of the U.S. Immigration and Customs Enforcement, located near Dallas, Texas. ICE - Dallas is a 95% leased facility that has been renovated to suit the ICE’s OCIO and Office of Human Capital. The OCIO is responsible for delivering innovative information technology (IT) and business solutions that enable ICE to protect and secure the nation. The asset will help facilitate the OCIO’s mission critical IT initiatives to modernize ICE’s IT systems and adapt and conform to modern IT management disciplines. Two additional triple net (NNN) private tenants occupy the remaining leased space under leases that feature annual lease escalations. The weighted average initial lease term for all three tenancies was 16.2 years and, at the time of acquisition, carried a weighted average remaining lease term of 13.3 years.

On May 8, 2024, the Company announced the acquisition of HSI - Orlando, a 27,840 square foot facility 100% leased to Homeland Security Investigations, the principal investigation arm within the Department of Homeland Security, with a 15-year lease that does not expire until March 2036. HSI is the principal investigative arm within the DHS and helps shield the nation from global threats to ensure Americans are safe and secure. The agency maintains operations in 235 cities nationwide and maintains an international presence that spans over 90 offices in more than 50 countries. HSI - Orlando also houses the Central Florida Intelligence Exchange, which is an all crime and all hazards fusion center, supporting nine counties with on-site staffing from multiple federal, state, and local agencies.

On May 15, 2024, the Company announced the acquisition of ICE - Orlando, a 49,420 square foot facility located in Orlando, Florida that is 100% leased to the U.S. Immigration and Customs Enforcement. The property features a 20-year lease that does not expire until August 2040. As one of the country’s premier federal law enforcement agencies, ICE is dedicated to detecting and dismantling transnational criminal networks that target the American people and threaten our industries, organizations, and financial system. The critical operations housed in this facility cover a significant portion of Central Florida.

 

Dividend

On July 17, 2024, the Board of Directors of Easterly approved a cash dividend for the second quarter of 2024 in the amount of $0.265 per common share. The dividend will be payable August 13, 2024 to shareholders of record on August 1, 2024.

 

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Subsequent Events

Subsequent to the quarter ending June 30, 2024, the Company entered into forward sales transactions through the December 2019 ATM Program for the sale of 400,000 shares of the Company's common stock at a net weighted average initial forward sales price of $13.14 per share that have not yet been settled.

As of the date of this release, the Company expects to receive aggregate net proceeds of approximately $5.3 million from the sale of an aggregate of 400,000 shares of the Company's common stock that have not yet been settled under the Company's December 2019 ATM Program, assuming these forward sales transactions are physically settled in full using a net weighted average combined initial forward sales price of $13.14 per share.

Guidance

This guidance is forward-looking and reflects management’s view of current and future market conditions. The Company’s actual results may differ materially from this guidance.

Outlook for the 12 Months Ending December 31, 2024

The Company is maintaining its guidance for full-year 2024 Core FFO per share on a fully diluted basis at a range of $1.15 - $1.17, as previously increased on May 8, 2024.

 

Low

High

Net income (loss) per share – fully diluted basis

$

0.22

 

 

 

0.24

Plus: Company’s share of real estate depreciation and amortization

$

0.92

 

 

 

0.92

FFO per share – fully diluted basis

$

1.14

 

 

 

1.16

Plus: Company’s share of depreciation of non-real estate assets

 

$

0.01

 

 

 

0.01

Core FFO per share – fully diluted basis

 

$

1.15

 

 

 

1.17

 

This guidance assumes (i) the closing of VA - Jacksonville through the JV at the Company’s pro rata share of approximately $41 million, (ii) approximately $50 million in wholly owned acquisitions throughout 2024, and (iii) $100 - $110 million of gross development-related investment during 2024.

Non-GAAP Supplemental Financial Measures

This section contains definitions of certain non-GAAP financial measures and other terms that the Company uses in this press release and, where applicable, the reasons why management believes these non-GAAP financial measures provide useful information to investors about the Company’s financial condition and results of operations and the other purposes for which management uses the measures. These measures should not be considered in isolation or as a substitute for measures of performance in accordance with GAAP. A reconciliation of the differences between each non-GAAP financial measure and the comparable GAAP financial measure are included in this press release following the consolidated financial statements. Additional detail can be found in the Company’s most recent annual report on Form 10-K and quarterly report on Form 10-Q, as well as other documents filed with or furnished to the Securities and Exchange Commission from time to time. We present certain financial information and metrics “at Easterly’s Share,” which is calculated on an entity-by-entity basis. “At Easterly’s Share” information, which we also refer to as being “at share,” “pro rata,” or “our share” is not, and is not intended to be, a presentation in accordance with GAAP.

Cash Available for Distribution (CAD) is a non-GAAP financial measure that is not intended to represent cash flow for the period and is not indicative of cash flow provided by operating activities as determined under GAAP. CAD is calculated in accordance with the current Nareit definition as FFO minus normalized recurring real estate-related expenditures and other non-cash items, nonrecurring expenditures and the unconsolidated real estate

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venture’s allocated share of these adjustments. CAD is presented solely as a supplemental disclosure because the Company believes it provides useful information regarding the Company’s ability to fund its dividends. Because all companies do not calculate CAD the same way, the presentation of CAD may not be comparable to similarly titled measures of other companies.

Core Funds from Operations (Core FFO) adjusts FFO to present an alternative measure of the Company's operating performance, which, when applicable, excludes items which it believes are not representative of ongoing operating results, such as liability management related costs (including losses on extinguishment of debt and modification costs), catastrophic event charges, depreciation of non-real estate assets, provision for credit losses, and the unconsolidated real estate venture's allocated share of these adjustments. In future periods, the Company may also exclude other items from Core FFO that it believes may help investors compare its results. The Company believes Core FFO more accurately reflects the ongoing operational and financial performance of the Company's core business.

EBITDA is calculated as the sum of net income (loss) before interest expense, taxes, depreciation and amortization, (gain) loss on the sale of operating properties, impairment loss, and the unconsolidated real estate venture’s allocated share of these adjustments. EBITDA is not intended to represent cash flow for the period, is not presented as an alternative to operating income as an indicator of operating performance, should not be considered in isolation or as a substitute for measures of performance prepared in accordance with GAAP, is not indicative of operating income or cash provided by operating activities as determined under GAAP and may be presented on a pro forma basis. EBITDA is presented solely as a supplemental disclosure with respect to liquidity because the Company believes it provides useful information regarding the Company's ability to service or incur debt. Because all companies do not calculate EBITDA the same way, the presentation of EBITDA may not be comparable to similarly titled measures of other companies.

Funds From Operations (FFO) is defined, in accordance with the Nareit FFO White Paper - 2018 Restatement, as net income (loss), calculated in accordance with GAAP, excluding depreciation and amortization related to real estate, gains and losses from the sale of certain real estate assets, gains and losses from change in control and impairment write-downs of certain real estate assets and investments in entities when the impairment is directly attributable to decreases in the value of depreciable real estate held by the entity. FFO includes the Company’s share of FFO generated by unconsolidated affiliates. FFO is a widely recognized measure of REIT performance. Although FFO is a non-GAAP financial measure, the Company believes that information regarding FFO is helpful to shareholders and potential investors.

Net Debt and Adjusted Net Debt Net Debt represents the Company's consolidated debt and its share of unconsolidated debt adjusted to exclude its share of unamortized premiums and discounts and deferred financing fees, less its share of cash and cash equivalents and property acquisition closing escrow, net of deposit. By excluding these items, the result provides an estimate of the contractual amount of borrowed capital to be repaid, net of cash available to repay it. The Company believes this calculation constitutes a beneficial supplemental non-GAAP financial disclosure to investors in understanding its financial condition. Adjusted Net Debt is Net Debt reduced by 1) for each project under construction or in design, the lesser of i) outstanding lump-sum reimbursement amounts and ii) the cost to date, 2) 40% times the amount by which the cost to date exceeds total lump-sum reimbursement amounts for each project under construction or in design and 3) outstanding lump-sum reimbursement amounts for projects previously completed. These adjustments are made to 1) remove the estimated portion of each project under construction, in design or previously completed that has been financed with debt which may be repaid with outstanding cost reimbursement payments from the US Government and 2) remove the estimated portion of each project under construction or in design, in excess of total lump-sum reimbursements, that has been financed with debt but has not yet produced earnings. See page 25 of the Company’s Q2 2024 Supplemental Information Package for further information. The Company’s method of calculating Net Debt and Adjusted Net Debt may be different from methods used by other REITs and may be

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presented on a pro forma basis. Accordingly, the Company's method may not be comparable to such other REITs.

Other Definitions

Fully diluted basis assumes the exchange of all outstanding common units representing limited partnership interests in the Company’s operating partnership, or common units, the full vesting of all shares of restricted stock, and the exchange of all earned and vested LTIP units in the Company’s operating partnership for shares of common stock on a one-for-one basis, which is not the same as the meaning of “fully diluted” under GAAP.

Conference Call Information

The Company will host a webcast and conference call at 11:00 am Eastern time on July 31, 2024 to review the second quarter 2024 performance, discuss recent events and conduct a question-and-answer session. A live webcast will be available in the Investor Relations section of the Company’s website. Shortly after the webcast, a replay of the webcast will be available on the Investor Relations section of the Company's website for up to twelve months. Please note that the full text of the press release and supplemental information package are also available through the Company’s website at ir.easterlyreit.com.

About Easterly Government Properties, Inc.

Easterly Government Properties, Inc. (NYSE: DEA) is based in Washington, D.C., and focuses primarily on the acquisition, development and management of Class A commercial properties that are leased to the U.S. Government. Easterly’s experienced management team brings specialized insight into the strategy and needs of mission-critical U.S. Government agencies for properties leased to such agencies either directly or through the U.S. General Services Administration (GSA). For further information on the company and its properties, please visit www.easterlyreit.com.

 

Contact:

Easterly Government Properties, Inc.

Lindsay S. Winterhalter

Senior Vice President, Investor Relations & Operations

202-596-3947

ir@easterlyreit.com

 

 

Forward Looking Statements

We make statements in this press release that are considered “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, or the Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act, which are usually identified by the use of words such as “anticipates,” “believes,” “estimates,” “expects,” “intends,” “may,” “plans,” “projects,” “seeks,” “should,” “will,” and variations of such words or similar expressions and include our guidance with respect to Net income (loss) and Core FFO per share on a fully diluted basis. We intend these forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995 and are including this statement in this press release for purposes of complying with those safe harbor provisions. These forward-looking statements reflect our current views about our plans, intentions, expectations, strategies and prospects, which are based on the information currently available to us and on assumptions we have made. Although we believe that our plans, intentions, expectations, strategies and

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prospects as reflected in or suggested by those forward-looking statements are reasonable, we can give no assurance that the plans, intentions, expectations or strategies will be attained or achieved. Furthermore, actual results may differ materially from those described in the forward-looking statements and will be affected by a variety of risks and factors that are beyond our control including, without limitation: risks associated with our dependence on the U.S. Government and its agencies for substantially all of our revenues, including credit risk and risk that the U.S. Government reduces its spending on real estate or that it changes its preference away from leased properties; risks associated with ownership and development of real estate; the risk of decreased rental rates or increased vacancy rates; the loss of key personnel; general volatility of the capital and credit markets and the market price of our common stock; the risk we may lose one or more major tenants; difficulties in completing and successfully integrating acquisitions; failure of acquisitions or development projects to occur at anticipated levels or yield anticipated results; risks associated with our joint venture activities; risks associated with actual or threatened terrorist attacks; intense competition in the real estate market that may limit our ability to attract or retain tenants or re-lease space; insufficient amounts of insurance or exposure to events that are either uninsured or underinsured; uncertainties and risks related to adverse weather conditions, natural disasters and climate change; exposure to liability relating to environmental and health and safety matters; limited ability to dispose of assets because of the relative illiquidity of real estate investments and the nature of our assets; exposure to litigation or other claims; risks associated with breaches of our data security; risks associated with our indebtedness; risks associated with derivatives or hedging activity; risks associated with mortgage debt or unsecured financing or the unavailability thereof, which could make it difficult to finance or refinance properties and could subject us to foreclosure; adverse impacts from any future pandemic, epidemic or outbreak of any highly infectious disease on the U.S., regional and global economies and our financial condition and results of operations; and other risks and uncertainties detailed in the “Risk Factors” section of our Form 10-K for the year ended December 31, 2023, filed with the Securities and Exchange Commission (SEC) on February 27, 2024, and under the heading “Risk Factors” in our other public filings. In addition, our anticipated qualification as a real estate investment trust involves the application of highly technical and complex provisions of the Internal Revenue Code of 1986, or the Code, and depends on our ability to meet the various requirements imposed by the Code through actual operating results, distribution levels and diversity of stock ownership. We assume no obligation to update publicly any forward looking statements, whether as a result of new information, future events or otherwise.

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Balance Sheet

(Unaudited, in thousands, except share amounts)

 

 

June 30, 2024

 

 

December 31, 2023

 

Assets

 

 

 

 

 

 

Real estate properties, net

 

$

2,417,749

 

 

$

2,319,143

 

Cash and cash equivalents

 

 

14,814

 

 

 

9,381

 

Restricted cash

 

 

12,425

 

 

 

12,558

 

Tenant accounts receivable

 

 

71,273

 

 

 

66,274

 

Investment in unconsolidated real estate venture

 

 

280,085

 

 

 

284,544

 

Intangible assets, net

 

 

147,510

 

 

 

148,453

 

Interest rate swaps

 

 

2,465

 

 

 

1,994

 

Prepaid expenses and other assets

 

 

49,717

 

 

 

37,405

 

Total assets

 

$

2,996,038

 

 

$

2,879,752

 

 

 

 

 

 

 

 

Liabilities

 

 

 

 

 

 

Revolving credit facility

 

 

72,500

 

 

 

79,000

 

Term loan facilities, net

 

 

274,181

 

 

 

299,108

 

Notes payable, net

 

 

844,939

 

 

 

696,532

 

Mortgage notes payable, net

 

 

209,283

 

 

 

220,195

 

Intangible liabilities, net

 

 

10,826

 

 

 

12,480

 

Deferred revenue

 

 

105,671

 

 

 

82,712

 

Accounts payable, accrued expenses and other liabilities

 

 

106,164

 

 

 

80,209

 

Total liabilities

 

 

1,623,564

 

 

 

1,470,236

 

 

 

 

 

 

 

 

Equity

 

 

 

 

 

 

Common stock, par value $0.01, 200,000,000 shares authorized,
  103,034,602 and 100,973,247 shares issued and outstanding at
   June 30, 2024 and December 31, 2023, respectively

 

 

1,030

 

 

 

1,010

 

Additional paid-in capital

 

 

1,810,678

 

 

 

1,783,338

 

Retained earnings

 

 

121,538

 

 

 

112,301

 

Cumulative dividends

 

 

(630,738

)

 

 

(576,319

)

Accumulated other comprehensive income

 

 

2,344

 

 

 

1,871

 

Total stockholders' equity

 

 

1,304,852

 

 

 

1,322,201

 

Non-controlling interest in Operating Partnership

 

 

67,622

 

 

 

87,315

 

Total equity

 

 

1,372,474

 

 

 

1,409,516

 

Total liabilities and equity

 

$

2,996,038

 

 

$

2,879,752

 

 

 

 

 

 

 

 

 

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Income Statement

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

 

 

Three Months Ended

 

 

Six Months Ended

 

 

 

June 30, 2024

 

 

June 30, 2023

 

 

June 30, 2024

 

 

June 30, 2023

 

Revenues

 

 

 

 

 

 

 

 

 

 

 

 

Rental income

 

$

72,183

 

 

$

67,758

 

 

$

142,929

 

 

$

135,906

 

Tenant reimbursements

 

 

2,814

 

 

 

2,500

 

 

 

3,831

 

 

 

4,575

 

Asset management income

 

 

551

 

 

 

517

 

 

 

1,101

 

 

 

1,034

 

Other income

 

 

673

 

 

 

598

 

 

 

1,160

 

 

 

1,078

 

Total revenues

 

 

76,221

 

 

 

71,373

 

 

 

149,021

 

 

 

142,593

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Expenses

 

 

 

 

 

 

 

 

 

 

 

 

Property operating

 

 

18,118

 

 

 

17,629

 

 

 

34,710

 

 

 

35,517

 

Real estate taxes

 

 

7,843

 

 

 

7,619

 

 

 

16,072

 

 

 

15,087

 

Depreciation and amortization

 

 

24,086

 

 

 

22,619

 

 

 

47,886

 

 

 

45,700

 

Acquisition costs

 

 

408

 

 

 

444

 

 

 

827

 

 

 

905

 

Corporate general and administrative

 

 

7,128

 

 

 

7,024

 

 

 

13,583

 

 

 

14,319

 

Total expenses

 

 

57,583

 

 

 

55,335

 

 

 

113,078

 

 

 

111,528

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other income (expense)

 

 

 

 

 

 

 

 

 

 

 

 

Income from unconsolidated real estate venture

 

 

1,377

 

 

 

1,418

 

 

 

2,792

 

 

 

2,820

 

Interest expense, net

 

 

(15,165

)

 

 

(11,678

)

 

 

(29,001

)

 

 

(23,693

)

Net income

 

 

4,850

 

 

 

5,778

 

 

 

9,734

 

 

 

10,192

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-controlling interest in Operating Partnership

 

 

(239

)

 

 

(675

)

 

 

(497

)

 

 

(1,198

)

Net income available to Easterly Government

 

 

 

 

 

 

 

 

 

 

 

 

Properties, Inc.

 

$

4,611

 

 

$

5,103

 

 

$

9,237

 

 

$

8,994

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income available to Easterly Government

 

 

 

 

 

 

 

 

 

 

 

 

Properties, Inc. per share:

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

0.04

 

 

$

0.05

 

 

$

0.09

 

 

$

0.09

 

Diluted

 

$

0.04

 

 

$

0.05

 

 

$

0.09

 

 

$

0.09

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted-average common shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

102,913,974

 

 

 

93,358,851

 

 

 

102,453,558

 

 

 

92,235,346

 

Diluted

 

 

103,200,622

 

 

 

93,641,382

 

 

 

102,729,699

 

 

 

92,508,651

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income, per share - fully diluted basis

 

$

0.04

 

 

$

0.05

 

 

$

0.09

 

 

$

0.10

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average common shares outstanding -

 

 

 

 

 

 

 

 

 

 

 

 

fully diluted basis

 

 

108,280,113

 

 

 

105,707,282

 

 

 

107,998,356

 

 

 

104,569,748

 

 

9


https://cdn.kscope.io/c2f297e3b97177682cf54fc1cd8550ee-img154181989_1.jpg 

 

EBITDA

(Unaudited, in thousands)

 

 

Three Months Ended

 

 

Six Months Ended

 

 

 

June 30, 2024

 

 

June 30, 2023

 

 

June 30, 2024

 

 

June 30, 2023

 

Net income

 

$

4,850

 

 

$

5,778

 

 

$

9,734

 

 

$

10,192

 

Depreciation and amortization

 

 

24,086

 

 

 

22,619

 

 

 

47,886

 

 

 

45,700

 

Interest expense

 

 

15,165

 

 

 

11,678

 

 

 

29,001

 

 

 

23,693

 

Tax expense

 

 

(293

)

 

 

352

 

 

 

(27

)

 

 

520

 

Unconsolidated real estate venture allocated share of above adjustments

 

 

2,081

 

 

 

1,942

 

 

 

4,155

 

 

 

3,882

 

EBITDA

 

$

45,889

 

 

$

42,369

 

 

$

90,749

 

 

$

83,987

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pro forma adjustments(1)

 

 

284

 

 

 

 

 

 

 

 

 

 

Pro forma EBITDA

 

$

46,173

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1) Pro forma assuming a full quarter of operations from the three operating properties acquired in the second quarter of 2024.

10


https://cdn.kscope.io/c2f297e3b97177682cf54fc1cd8550ee-img154181989_1.jpg 

 

FFO and CAD

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

 

 

Three Months Ended

 

 

Six Months Ended

 

 

 

June 30, 2024

 

 

June 30, 2023

 

 

June 30, 2024

 

 

June 30, 2023

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income

 

$

4,850

 

 

$

5,778

 

 

$

9,734

 

 

$

10,192

 

Depreciation of real estate assets

 

 

23,834

 

 

 

22,368

 

 

 

47,383

 

 

 

45,199

 

Unconsolidated real estate venture allocated share of above adjustments

 

 

2,006

 

 

 

1,875

 

 

 

4,008

 

 

 

3,750

 

FFO

 

$

30,690

 

 

$

30,021

 

 

$

61,125

 

 

$

59,141

 

Adjustments to FFO:

 

 

 

 

 

 

 

 

 

 

 

 

Loss on extinguishment of debt

 

$

258

 

 

$

-

 

 

$

258

 

 

$

14

 

Provision for credit losses

 

 

218

 

 

 

-

 

 

 

218

 

 

 

-

 

Natural disaster event expense, net of recovery

 

 

(61

)

 

 

(22

)

 

 

(8

)

 

 

78

 

Depreciation of non-real estate assets

 

 

252

 

 

 

251

 

 

 

503

 

 

 

501

 

Unconsolidated real estate venture allocated share of above adjustments

 

 

16

 

 

 

17

 

 

 

33

 

 

 

33

 

Core FFO

 

$

31,373

 

 

$

30,267

 

 

$

62,129

 

 

$

59,767

 

 

 

 

 

 

 

 

 

 

 

 

 

 

FFO, per share - fully diluted basis

 

$

0.28

 

 

$

0.28

 

 

$

0.57

 

 

$

0.57

 

Core FFO, per share - fully diluted basis

 

$

0.29

 

 

$

0.29

 

 

$

0.58

 

 

$

0.57

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Core FFO

 

$

31,373

 

 

$

30,267

 

 

$

62,129

 

 

$

59,767

 

Straight-line rent and other non-cash adjustments

 

 

(918

)

 

 

(902

)

 

 

(1,774

)

 

 

(1,365

)

Amortization of above-/below-market leases

 

 

(480

)

 

 

(676

)

 

 

(1,074

)

 

 

(1,376

)

Amortization of deferred revenue

 

 

(1,759

)

 

 

(1,622

)

 

 

(3,363

)

 

 

(3,106

)

Non-cash interest expense

 

 

389

 

 

 

244

 

 

 

696

 

 

 

488

 

Non-cash compensation

 

 

1,160

 

 

 

1,299

 

 

 

2,389

 

 

 

2,967

 

Natural Disaster event expense, net of recovery

 

 

61

 

 

 

22

 

 

 

8

 

 

 

(78

)

Principal amortization

 

 

(1,078

)

 

 

(1,068

)

 

 

(2,195

)

 

 

(2,126

)

Maintenance capital expenditures

 

 

(3,813

)

 

 

(2,329

)

 

 

(5,537

)

 

 

(5,069

)

Contractual tenant improvements

 

 

(129

)

 

 

(712

)

 

 

(573

)

 

 

(1,013

)

Unconsolidated real estate venture allocated share of above adjustments

 

 

-

 

 

 

39

 

 

 

(15

)

 

 

(74

)

Cash Available for Distribution (CAD)

 

$

24,806

 

 

$

24,562

 

 

$

50,691

 

 

$

49,015

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average common shares outstanding - fully diluted basis

 

 

108,280,113

 

 

 

105,707,282

 

 

 

107,998,356

 

 

 

104,569,748

 

 

 

 

 

 

Net Debt and Adjusted Net Debt

(Unaudited, in thousands)

 

June 30, 2024

 

Total Debt(1)

$

1,407,507

 

Less: Cash and cash equivalents

 

(15,640

)

Net Debt

$

1,391,867

 

Less: Adjustment for development projects(2)

 

(124,496

)

Adjusted Net Debt

$

1,267,371

 

 

 

 

1 Excludes unamortized premiums / discounts and deferred financing fees.

2 See definition of Adjusted Net Debt on Page 5.

 

 

 

11


EX-99.2

Exhibit 99.2

https://cdn.kscope.io/c2f297e3b97177682cf54fc1cd8550ee-img155105510_0.jpg 

 


Disclaimers

https://cdn.kscope.io/c2f297e3b97177682cf54fc1cd8550ee-img155105510_1.jpg 

 

 

Forward-looking Statement

We make statements in this Supplemental Information Package that are considered “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, or the Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act, which are usually identified by the use of words such as “anticipates,” “believes,” “estimates,” “expects,” “intends,” “may,” “plans,” “projects,” “seeks,” “should,” “will,” and variations of such words or similar expressions. We intend these forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995 and are including this statement in this Supplemental Information Package for purposes of complying with those safe harbor provisions. These forward-looking statements reflect our current views about our plans, intentions, expectations, strategies and prospects, which are based on the information currently available to us and on assumptions we have made. Although we believe that our plans, intentions, expectations, strategies and prospects as reflected in or suggested by those forward-looking statements are reasonable, we can give no assurance that the plans, intentions, expectations or strategies will be attained or achieved. Furthermore, actual results may differ materially from those described in the forward-looking statements and will be affected by a variety of risks and factors that are beyond our control including, without limitation: risks associated with our dependence on the U.S. Government and its agencies for substantially all of our revenues, including credit risk and risk that the U.S. Government reduces its spending on real estate or that it changes its preference away from leased properties; risks associated with ownership and development of real estate; the risk of decreased rental rates or increased vacancy rates; the loss of key personnel; general volatility of the capital and credit markets and the market price of our common stock; the risk we may lose one or more major tenants; difficulties in completing and successfully integrating acquisitions; failure of acquisitions or development projects to occur at anticipated levels or yield anticipated results; risks associated with our joint venture activities; risks associated with actual or threatened terrorist attacks; intense competition in the real estate market that may limit our ability to attract or retain tenants or re-lease space; insufficient amounts of insurance or exposure to events that are either uninsured or underinsured; uncertainties and risks related to adverse weather conditions, natural disasters and climate change; exposure to liability relating to environmental and health and safety matters; limited ability to dispose of assets because of the relative illiquidity of real estate investments and the nature of our assets; exposure to litigation or other claims; risks associated with breaches of our data security; risks associated with our indebtedness; risks associated with derivatives or hedging activity; risks associated with mortgage debt or unsecured financing or the unavailability thereof, which could make it difficult to finance or refinance properties and could subject us to foreclosure; adverse impacts from any future pandemic, epidemic or outbreak of any highly infectious disease on the U.S., regional and global economies and the financial condition and results of operations of the Company; and other risks and uncertainties detailed in the “Risk Factors” section of our Form 10-K for the year ended December 31, 2023, filed with the Securities and Exchange Commission, or the SEC, on February 27, 2024 and included under the heading “Risk Factors” in our other public filings. In addition, our qualification as a real estate investment trust involves the application of highly technical and complex provisions of the Internal Revenue Code of 1986, or the Code, and depends on our ability to meet the various requirements imposed by the Code through actual operating results, distribution levels and diversity of stock ownership. We assume no obligation to update publicly any forward-looking statements, whether as a result of new information, future events or otherwise.

Ratings

Ratings are not recommendations to buy, sell or hold the Company’s securities.

The following discussion related to the consolidated financial statements of the Company should be read in conjunction with the financial statements for the quarter ended June 30, 2024 that will be released in our Form 10-Q to be filed with the SEC on or about July 31, 2024.

 

2


Supplemental Definitions

https://cdn.kscope.io/c2f297e3b97177682cf54fc1cd8550ee-img155105510_2.jpg 

 

 

This section contains definitions of certain non-GAAP financial measures and other terms that the Company uses in this Supplemental Information Package and, where applicable, the reasons why management believes these non-GAAP financial measures provide useful information to investors about the Company’s financial condition and results of operations and the other purposes for which management uses the measures. These measures should not be considered in isolation or as a substitute for measures of performance in accordance with GAAP. Additional detail can be found in the Company’s most recent quarterly report on Form 10-Q and the Company’s most recent annual report on Form 10-K, as well as other documents filed with or furnished to the SEC from time to time. We present certain financial information and metrics “at Easterly’s Share,” which is calculated on an entity-by-entity basis. “At Easterly’s Share” information, which we also refer to as being “at share,” “pro rata,” “our pro rata share” or “our share” is not, and is not intended to be, a presentation in accordance with GAAP.

 

Annualized lease income is defined as the annualized contractual base rent for the last month in a specified period, plus the annualized straight-line rent adjustments for the last month in such period and the annualized net expense reimbursements earned by us for the last month in such period.

Cash Available for Distribution (CAD) is a non-GAAP financial measure that is not intended to represent cash flow for the period and is not indicative of cash flow provided by operating activities as determined under GAAP. CAD is calculated in accordance with the current Nareit definition as FFO minus normalized recurring real estate-related expenditures and other non-cash items, nonrecurring expenditures and the unconsolidated real estate venture’s allocated share of these adjustments. CAD is presented solely as a supplemental disclosure because the Company believes it provides useful information regarding the Company’s ability to fund its dividends. Because all companies do not calculate CAD the same way, the presentation of CAD may not be comparable to similarly titled measures of other companies.

Cash fixed charge coverage ratio is calculated as EBITDA divided by the sum of principal amortization and interest expense, excluding amortization of premiums / discounts and deferred financing fees, for the most recent quarter.

Cash interest coverage ratio is calculated as EBITDA divided by interest expense, excluding amortization of premiums / discounts and deferred financing fees, for the most recent quarter.

Core Funds from Operations (Core FFO) adjusts FFO to present an alternative measure of the Company's operating performance, which, when applicable, excludes items which it believes are not representative of ongoing operating results, such as liability management related costs (including losses on extinguishment of debt and modification costs), catastrophic event charges, depreciation of non-real estate assets, provision for credit losses, and the unconsolidated real estate venture's allocated share of these adjustments. In future periods, the Company may also exclude other items from Core FFO that it believes may help investors compare its results. The Company believes Core FFO more accurately reflects the ongoing operational and financial performance of the Company's core business.

EBITDA is calculated as the sum of net income (loss) before interest expense, taxes, depreciation and amortization, (gain) loss on the sale of operating properties, impairment loss, and the unconsolidated real estate venture’s allocated share of these adjustments. EBITDA is not intended to represent cash flow for the period, is not presented as an alternative to operating income as an indicator of operating performance, should not be considered in isolation or as a substitute for measures of performance prepared in accordance with GAAP, is not indicative of operating income or cash provided by operating activities as determined under GAAP and may be presented on a pro forma basis. EBITDA is presented solely as a supplemental disclosure with respect to liquidity because the Company believes it provides useful information regarding the Company's ability to service or incur debt. Because all companies do not calculate EBITDA the same way, the presentation of EBITDA may not be comparable to similarly titled measures of other companies.

Fully diluted basis assumes the exchange of all outstanding common units representing limited partnership interests in the Company’s operating partnership, or common units, the full vesting of all shares of restricted stock, and the exchange of all earned and vested LTIP units in the Company’s operating partnership for shares of common stock on a one-for-one basis, which is not the same as the meaning of “fully diluted” under GAAP.

3


Supplemental Definitions

https://cdn.kscope.io/c2f297e3b97177682cf54fc1cd8550ee-img155105510_2.jpg 

 

 

Funds From Operations (FFO) is defined, in accordance with the Nareit FFO White Paper - 2018 Restatement, as net income (loss), calculated in accordance with GAAP, excluding depreciation and amortization related to real estate, gains and losses from the sale of certain real estate assets, gains and losses from change in control and impairment write-downs of certain real estate assets and investments in entities when the impairment is directly attributable to decreases in the value of depreciable real estate held by the entity. FFO includes the Company’s share of FFO generated by unconsolidated affiliates. FFO is a widely recognized measure of REIT performance. Although FFO is a non-GAAP financial measure, the Company believes that information regarding FFO is helpful to shareholders and potential investors.

Net Debt and Adjusted Net Debt Net Debt represents the Company's consolidated debt and its share of unconsolidated debt adjusted to exclude its share of unamortized premiums and discounts and deferred financing fees, less its share of cash and cash equivalents and property acquisition closing escrow, net of deposit. By excluding these items, the result provides an estimate of the contractual amount of borrowed capital to be repaid, net of cash available to repay it. The Company believes this calculation constitutes a beneficial supplemental non-GAAP financial disclosure to investors in understanding its financial condition. Adjusted Net Debt is Net Debt reduced by 1) for each project under construction or in design, the lesser of i) outstanding lump-sum reimbursement amounts and ii) the cost to date, 2) 40% times the amount by which the cost to date exceeds total lump-sum reimbursement amounts for each project under construction or in design and 3) outstanding lump-sum reimbursement amounts for projects previously completed. These adjustments are made to 1) remove the estimated portion of each project under construction, in design or previously completed that has been financed with debt which may be repaid with outstanding cost reimbursement payments from the US Government and 2) remove the estimated portion of each project under construction or in design, in excess of total lump-sum reimbursements, that has been financed with debt but has not yet produced earnings. See page 25 for further information. The Company’s method of calculating Net Debt and Adjusted Net Debt may be different from methods used by other REITs and may be presented on a pro forma basis. Accordingly, the Company's method may not be comparable to such other REITs.

Net Operating Income (NOI) and Cash NOI NOI is calculated as net income adjusted to exclude depreciation and amortization, acquisition costs, corporate general and administrative costs, interest expense, gains or losses from sales of property, impairment loss, and the unconsolidated real estate venture’s allocated share of these adjustments. Cash NOI excludes from NOI straight-line rent, amortization of above-/below-market leases, amortization of deferred revenue (which results from landlord assets funded by tenants), and the unconsolidated real estate venture’s allocated share of these adjustments. NOI and Cash NOI presented by the Company may not be comparable to NOI and Cash NOI reported by other REITs that define NOI and Cash NOI differently. The Company believes that NOI and Cash NOI provide investors with useful measures of the operating performance of its properties. NOI and Cash NOI should not be considered an alternative to net income as an indication of the Company's performance or to cash flows as a measure of the Company's liquidity or its ability to make distributions.

4


Table of Contents

https://cdn.kscope.io/c2f297e3b97177682cf54fc1cd8550ee-img155105510_3.jpg 

 

 

 

 

Overview

 

 

 

 

 

Corporate Information and Analyst Coverage

 

6

 

 

 

Executive Summary

 

7

 

 

 

Corporate Financials

 

 

 

 

 

Balance Sheets

 

8

 

 

 

Income Statements

 

9

 

 

 

Net Operating Income

 

10

 

 

 

EBITDA

 

11

 

 

 

FFO and CAD

 

12

 

 

 

Unconsolidated Real Estate Venture

 

13

 

 

 

Debt

 

 

 

 

 

Debt Schedules

 

15

 

 

 

Debt Maturities

 

17

 

 

 

Properties

 

 

 

 

 

Leased Operating Property Overview

 

18

 

 

 

Tenants

 

22

 

 

 

Lease Expirations

 

24

 

 

 

Summary of Re/Development Projects

 

25

 

 

 

 

 

5


Corporate Information and Analyst Coverage

https://cdn.kscope.io/c2f297e3b97177682cf54fc1cd8550ee-img155105510_4.jpg 

 

 

 

Corporate Information

 

 

 

 

Corporate Headquarters

Stock Exchange Listing

Information Requests

Investor Relations

2001 K Street NW

New York Stock Exchange

Please contact ir@easterlyreit.com

Lindsay Winterhalter

Suite 775 North

 

or 202-596-3947 to request an

Senior VP, Operations

Washington, DC 20006

Ticker

Investor Relations package

 

202-595-9500

DEA

 

 

 

Executive Team

 

Board of Directors

 

Darrell Crate, CEO

Meghan Baivier, COO & President

William Binnie, Chairman

Emil Henry Jr.

Michael Ibe, Vice-Chairman & EVP

Mark Bauer, EVP Development

Darrell Crate

Michael Ibe

Allison Marino, CFO & CAO

Franklin Logan, GC

Cynthia Fisher

Tara Innes

Stuart Burns, EVP Government Relations

Andrew Pulliam, EVP Acquisitions

Scott Freeman

 

Nick Nimerala, SVP Chief Asset Officer

 

 

 

 

 

Equity Research Coverage

 

 

 

 

 

Citigroup

Raymond James & Associates

RBC Capital Markets

Michael A. Griffin

Bill Crow

Michael Carroll

212-816-5871

727-567-2594

440-715-2649

 

 

 

Jefferies

Truist Securities

Compass Point Research & Trading, LLC

Peter Abramowitz

Michael R. Lewis

Merrill Ross

212-336-7241

212-319-5659

202-534-1392

 

 

 

BMO Capital Markets

 

 

John P. Kim

 

 

212-885-4115

 

 

 

Any opinions, estimates, forecasts or predictions regarding Easterly Government Properties, Inc.’s performance made by these analysts are theirs alone and do not represent opinions, estimates, forecasts or predictions of Easterly Government Properties, Inc. or its management. Easterly Government Properties, Inc. does not by its reference above or distribution imply its endorsement of or concurrence with such opinions, estimates, forecasts or predictions.

6


Executive Summary

(In thousands, except share and per share amounts)

https://cdn.kscope.io/c2f297e3b97177682cf54fc1cd8550ee-img155105510_5.jpg 

 

 

Outstanding Classes of Stock and Partnership Units - Fully Diluted Basis

At June 30, 2024

 

 

Earnings

Three months ended June 30, 2024

 

Three months ended June 30, 2023

 

Common shares

 

102,987,867

 

 

Net income available to Easterly Government Properties, Inc.

$

4,611

 

$

5,103

 

Unvested restricted shares

 

46,735

 

 

Net income available to Easterly Government Properties, Inc.

 

 

 

 

Common partnership and vested LTIP units

 

5,339,579

 

 

per share:

 

 

 

 

Total - fully diluted basis

 

108,374,181

 

 

Basic

$

0.04

 

$

0.05

 

 

 

 

 

Diluted

$

0.04

 

$

0.05

 

 

 

 

 

 

 

 

 

 

Market Capitalization

At June 30, 2024

 

 

Net income

$

4,850

 

$

5,778

 

Price of Common Shares

$

12.37

 

 

Net income, per share - fully diluted basis

$

0.04

 

$

0.05

 

Total equity market capitalization - fully diluted basis

$

1,340,589

 

 

Funds From Operations (FFO)

$

30,690

 

$

30,021

 

Net Debt

 

1,391,867

 

 

FFO, per share - fully diluted basis

$

0.28

 

$

0.28

 

Total enterprise value

$

2,732,457

 

 

 

 

 

 

 

 

 

 

 

Core FFO

$

31,373

 

$

30,267

 

 

 

 

 

Core FFO, per share - fully diluted basis

$

0.29

 

$

0.29

 

Ratios

At June 30, 2024

 

 

 

 

 

 

 

Net debt to total enterprise value

 

50.9

%

 

Cash Available for Distribution (CAD)

$

24,806

 

$

24,562

 

Net debt to annualized quarterly EBITDA

 

7.6

x

 

 

 

 

 

 

Adjusted Net Debt to annualized quarterly pro forma EBITDA

 

6.9

x

 

Liquidity

At June 30, 2024

 

Cash interest coverage ratio

 

3.2

x

 

Cash and cash equivalents

 

 

$

15,640

 

Cash fixed charge coverage ratio

 

2.9

x

 

Available under $400 million senior unsecured 2024 revolving credit facility(1)

 

$

327,375

 

 

 

 

 

 

 

 

 

 

 

(1) 2024 revolving credit facility has an accordion feature that provides additional capacity, subject to syndication of the increase and the satisfaction of customary terms and conditions, of up to $300 million, for a total revolving credit facility size of not more than $700 million.

 

7


Balance Sheets

(Unaudited, in thousands, except share amounts)

https://cdn.kscope.io/c2f297e3b97177682cf54fc1cd8550ee-img155105510_6.jpg 

 

 

 

 

 

June 30, 2024

 

 

December 31, 2023

 

Assets

 

 

 

 

 

 

Real estate properties, net

 

$

2,417,749

 

 

$

2,319,143

 

Cash and cash equivalents

 

 

14,814

 

 

 

9,381

 

Restricted cash

 

 

12,425

 

 

 

12,558

 

Tenant accounts receivable

 

 

71,273

 

 

 

66,274

 

Investment in unconsolidated real estate venture

 

 

280,085

 

 

 

284,544

 

Intangible assets, net

 

 

147,510

 

 

 

148,453

 

Interest rate swaps

 

 

2,465

 

 

 

1,994

 

Prepaid expenses and other assets

 

 

49,717

 

 

 

37,405

 

Total assets

 

$

2,996,038

 

 

$

2,879,752

 

 

 

 

 

 

 

 

Liabilities

 

 

 

 

 

 

Revolving credit facility

 

 

72,500

 

 

 

79,000

 

Term loan facilities, net

 

 

274,181

 

 

 

299,108

 

Notes payable, net

 

 

844,939

 

 

 

696,532

 

Mortgage notes payable, net

 

 

209,283

 

 

 

220,195

 

Intangible liabilities, net

 

 

10,826

 

 

 

12,480

 

Deferred revenue

 

 

105,671

 

 

 

82,712

 

Accounts payable, accrued expenses and other liabilities

 

 

106,164

 

 

 

80,209

 

Total liabilities

 

 

1,623,564

 

 

 

1,470,236

 

 

 

 

 

 

 

 

Equity

 

 

 

 

 

 

Common stock, par value $0.01, 200,000,000 shares authorized,
  103,034,602 and 100,973,247 shares issued and outstanding at
   June 30, 2024 and December 31, 2023, respectively

 

 

1,030

 

 

 

1,010

 

Additional paid-in capital

 

 

1,810,678

 

 

 

1,783,338

 

Retained earnings

 

 

121,538

 

 

 

112,301

 

Cumulative dividends

 

 

(630,738

)

 

 

(576,319

)

Accumulated other comprehensive income

 

 

2,344

 

 

 

1,871

 

Total stockholders' equity

 

 

1,304,852

 

 

 

1,322,201

 

Non-controlling interest in Operating Partnership

 

 

67,622

 

 

 

87,315

 

Total equity

 

 

1,372,474

 

 

 

1,409,516

 

Total liabilities and equity

 

$

2,996,038

 

 

$

2,879,752

 

 

 

 

 

 

 

 

 

8


 Income Statements

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

https://cdn.kscope.io/c2f297e3b97177682cf54fc1cd8550ee-img155105510_7.jpg 

 

 

 

 

Three Months Ended

 

 

Six Months Ended

 

 

 

June 30, 2024

 

 

June 30, 2023

 

 

June 30, 2024

 

 

June 30, 2023

 

Revenues

 

 

 

 

 

 

 

 

 

 

 

 

Rental income

 

$

72,183

 

 

$

67,758

 

 

$

142,929

 

 

$

135,906

 

Tenant reimbursements

 

 

2,814

 

 

 

2,500

 

 

 

3,831

 

 

 

4,575

 

Asset management income

 

 

551

 

 

 

517

 

 

 

1,101

 

 

 

1,034

 

Other income

 

 

673

 

 

 

598

 

 

 

1,160

 

 

 

1,078

 

Total revenues

 

 

76,221

 

 

 

71,373

 

 

 

149,021

 

 

 

142,593

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Expenses

 

 

 

 

 

 

 

 

 

 

 

 

Property operating

 

 

18,118

 

 

 

17,629

 

 

 

34,710

 

 

 

35,517

 

Real estate taxes

 

 

7,843

 

 

 

7,619

 

 

 

16,072

 

 

 

15,087

 

Depreciation and amortization

 

 

24,086

 

 

 

22,619

 

 

 

47,886

 

 

 

45,700

 

Acquisition costs

 

 

408

 

 

 

444

 

 

 

827

 

 

 

905

 

Corporate general and administrative

 

 

7,128

 

 

 

7,024

 

 

 

13,583

 

 

 

14,319

 

Total expenses

 

 

57,583

 

 

 

55,335

 

 

 

113,078

 

 

 

111,528

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other income (expense)

 

 

 

 

 

 

 

 

 

 

 

 

Income from unconsolidated real estate venture

 

 

1,377

 

 

 

1,418

 

 

 

2,792

 

 

 

2,820

 

Interest expense, net

 

 

(15,165

)

 

 

(11,678

)

 

 

(29,001

)

 

 

(23,693

)

Net income

 

 

4,850

 

 

 

5,778

 

 

 

9,734

 

 

 

10,192

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-controlling interest in Operating Partnership

 

 

(239

)

 

 

(675

)

 

 

(497

)

 

 

(1,198

)

Net income available to Easterly Government

 

 

 

 

 

 

 

 

 

 

 

 

Properties, Inc.

 

$

4,611

 

 

$

5,103

 

 

$

9,237

 

 

$

8,994

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income available to Easterly Government

 

 

 

 

 

 

 

 

 

 

 

 

Properties, Inc. per share:

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

0.04

 

 

$

0.05

 

 

$

0.09

 

 

$

0.09

 

Diluted

 

$

0.04

 

 

$

0.05

 

 

$

0.09

 

 

$

0.09

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted-average common shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

102,913,974

 

 

 

93,358,851

 

 

 

102,453,558

 

 

 

92,235,346

 

Diluted

 

 

103,200,622

 

 

 

93,641,382

 

 

 

102,729,699

 

 

 

92,508,651

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income, per share - fully diluted basis

 

$

0.04

 

 

$

0.05

 

 

$

0.09

 

 

$

0.10

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average common shares outstanding -

 

 

 

 

 

 

 

 

 

 

 

 

fully diluted basis

 

 

108,280,113

 

 

 

105,707,282

 

 

 

107,998,356

 

 

 

104,569,748

 

 

 

9


 Net Operating Income

 (Unaudited, in thousands)

https://cdn.kscope.io/c2f297e3b97177682cf54fc1cd8550ee-img155105510_7.jpg 

 

 

 

 

 

Three Months Ended

 

 

Six Months Ended

 

 

 

June 30, 2024

 

 

June 30, 2023

 

 

June 30, 2024

 

 

June 30, 2023

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income

 

$

4,850

 

 

$

5,778

 

 

$

9,734

 

 

$

10,192

 

Depreciation and amortization

 

 

24,086

 

 

 

22,619

 

 

 

47,886

 

 

 

45,700

 

Acquisition costs

 

 

408

 

 

 

444

 

 

 

827

 

 

 

905

 

Corporate general and administrative

 

 

7,128

 

 

 

7,024

 

 

 

13,583

 

 

 

14,319

 

Interest expense

 

 

15,165

 

 

 

11,678

 

 

 

29,001

 

 

 

23,693

 

Unconsolidated real estate venture allocated share of above adjustments

 

 

2,070

 

 

 

1,958

 

 

 

4,156

 

 

 

3,925

 

Net Operating Income

 

 

53,707

 

 

 

49,501

 

 

 

105,187

 

 

 

98,734

 

Adjustments to Net Operating Income:

 

 

 

 

 

 

 

 

 

 

 

 

Straight-line rent and other non-cash adjustments

 

 

(907

)

 

 

(988

)

 

 

(1,751

)

 

 

(1,482

)

Amortization of above-/below-market leases

 

 

(480

)

 

 

(676

)

 

 

(1,074

)

 

 

(1,376

)

Amortization of deferred revenue

 

 

(1,759

)

 

 

(1,622

)

 

 

(3,363

)

 

 

(3,106

)

Unconsolidated real estate venture allocated share of above adjustments

 

 

24

 

 

 

23

 

 

 

48

 

 

 

(112

)

Cash Net Operating Income

 

$

50,585

 

 

$

46,238

 

 

$

99,047

 

 

$

92,658

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

10


 EBITDA

(Unaudited, in thousands)

https://cdn.kscope.io/c2f297e3b97177682cf54fc1cd8550ee-img155105510_8.jpg 

 

 

 

 

 

Three Months Ended

 

 

Six Months Ended

 

 

 

June 30, 2024

 

 

June 30, 2023

 

 

June 30, 2024

 

 

June 30, 2023

 

Net income

 

$

4,850

 

 

$

5,778

 

 

$

9,734

 

 

$

10,192

 

Depreciation and amortization

 

 

24,086

 

 

 

22,619

 

 

 

47,886

 

 

 

45,700

 

Interest expense

 

 

15,165

 

 

 

11,678

 

 

 

29,001

 

 

 

23,693

 

Tax expense

 

 

(293

)

 

 

352

 

 

 

(27

)

 

 

520

 

Unconsolidated real estate venture allocated share of above adjustments

 

 

2,081

 

 

 

1,942

 

 

 

4,155

 

 

 

3,882

 

EBITDA

 

$

45,889

 

 

$

42,369

 

 

$

90,749

 

 

$

83,987

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pro forma adjustments(1)

 

 

284

 

 

 

 

 

 

 

 

 

 

Pro forma EBITDA

 

$

46,173

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1) Pro forma assuming a full quarter of operations from the three operating properties acquired in the second quarter of 2024.

11


FFO and CAD

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

https://cdn.kscope.io/c2f297e3b97177682cf54fc1cd8550ee-img155105510_8.jpg 

 

 

 

 

Three Months Ended

 

 

Six Months Ended

 

 

 

June 30, 2024

 

 

June 30, 2023

 

 

June 30, 2024

 

 

June 30, 2023

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income

 

$

4,850

 

 

$

5,778

 

 

$

9,734

 

 

$

10,192

 

Depreciation of real estate assets

 

 

23,834

 

 

 

22,368

 

 

 

47,383

 

 

 

45,199

 

Unconsolidated real estate venture allocated share of above adjustments

 

 

2,006

 

 

 

1,875

 

 

 

4,008

 

 

 

3,750

 

FFO

 

$

30,690

 

 

$

30,021

 

 

$

61,125

 

 

$

59,141

 

Adjustments to FFO:

 

 

 

 

 

 

 

 

 

 

 

 

Loss on extinguishment of debt

 

$

258

 

 

$

-

 

 

$

258

 

 

$

14

 

Provision for credit losses

 

 

218

 

 

 

-

 

 

 

218

 

 

 

-

 

Natural disaster event expense, net of recovery

 

 

(61

)

 

 

(22

)

 

 

(8

)

 

 

78

 

Depreciation of non-real estate assets

 

 

252

 

 

 

251

 

 

 

503

 

 

 

501

 

Unconsolidated real estate venture allocated share of above adjustments

 

 

16

 

 

 

17

 

 

 

33

 

 

 

33

 

Core FFO

 

$

31,373

 

 

$

30,267

 

 

$

62,129

 

 

$

59,767

 

 

 

 

 

 

 

 

 

 

 

 

 

 

FFO, per share - fully diluted basis

 

$

0.28

 

 

$

0.28

 

 

$

0.57

 

 

$

0.57

 

Core FFO, per share - fully diluted basis

 

$

0.29

 

 

$

0.29

 

 

$

0.58

 

 

$

0.57

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Core FFO

 

$

31,373

 

 

$

30,267

 

 

$

62,129

 

 

$

59,767

 

Straight-line rent and other non-cash adjustments

 

 

(918

)

 

 

(902

)

 

 

(1,774

)

 

 

(1,365

)

Amortization of above-/below-market leases

 

 

(480

)

 

 

(676

)

 

 

(1,074

)

 

 

(1,376

)

Amortization of deferred revenue

 

 

(1,759

)

 

 

(1,622

)

 

 

(3,363

)

 

 

(3,106

)

Non-cash interest expense

 

 

389

 

 

 

244

 

 

 

696

 

 

 

488

 

Non-cash compensation

 

 

1,160

 

 

 

1,299

 

 

 

2,389

 

 

 

2,967

 

Natural Disaster event expense, net of recovery

 

 

61

 

 

 

22

 

 

 

8

 

 

 

(78

)

Principal amortization

 

 

(1,078

)

 

 

(1,068

)

 

 

(2,195

)

 

 

(2,126

)

Maintenance capital expenditures

 

 

(3,813

)

 

 

(2,329

)

 

 

(5,537

)

 

 

(5,069

)

Contractual tenant improvements

 

 

(129

)

 

 

(712

)

 

 

(573

)

 

 

(1,013

)

Unconsolidated real estate venture allocated share of above adjustments

 

 

-

 

 

 

39

 

 

 

(15

)

 

 

(74

)

Cash Available for Distribution (CAD)

 

$

24,806

 

 

$

24,562

 

 

$

50,691

 

 

$

49,015

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average common shares outstanding - fully diluted basis

 

 

108,280,113

 

 

 

105,707,282

 

 

 

107,998,356

 

 

 

104,569,748

 

 

12


Unconsolidated Real Estate Venture

(Unaudited, in thousands)

 

 

 

Balance Sheet Information

Balance Sheet

 

 

Easterly's Share(2)

 

 

June 30, 2024

 

 

June 30, 2024

 

Real estate properties - net

$

444,667

 

 

$

235,674

 

Total assets

 

538,210

 

 

 

285,252

 

Total liabilities

 

10,337

 

 

 

5,479

 

Total preferred stockholders' equity

 

118

 

 

 

63

 

Total common stockholders' equity

 

527,755

 

 

 

279,710

 

Basis difference(1)

 

-

 

 

 

375

 

Total equity

$

527,873

 

 

$

280,085

 

(1) This amount represents the aggregate difference between the Company’s historical cost basis and basis reflected at the joint venture level.

(2) The Company owns 53.0% of the properties through the unconsolidated joint venture.

 

13


 Unconsolidated Real Estate Venture (Cont.)

(Unaudited, in thousands)

https://cdn.kscope.io/c2f297e3b97177682cf54fc1cd8550ee-img155105510_8.jpg 

 

 

Income Statement Information

Three Months Ended

 

 

Easterly's Share(1)

 

 

Six Months Ended

 

 

Easterly's Share(1)

 

 

June 30, 2024

 

 

June 30, 2024

 

 

June 30, 2024

 

 

June 30, 2024

 

Revenues

 

 

 

 

 

 

 

 

 

 

 

Rental income

$

10,704

 

 

$

5,673

 

 

$

21,360

 

 

$

11,321

 

Other income

 

47

 

 

 

25

 

 

 

92

 

 

 

49

 

Total Revenues

 

10,751

 

 

 

5,698

 

 

 

21,452

 

 

 

11,370

 

Operating expenses

 

 

 

 

 

 

 

 

 

 

 

Property operating

 

2,240

 

 

 

1,187

 

 

 

4,400

 

 

 

2,331

 

Real estate taxes

 

1,458

 

 

 

772

 

 

 

2,845

 

 

 

1,507

 

Depreciation and amortization

 

3,816

 

 

 

2,022

 

 

 

7,625

 

 

 

4,041

 

Asset management fees

 

550

 

 

 

292

 

 

 

1,100

 

 

 

584

 

Corporate general and administrative

 

49

 

 

 

26

 

 

 

133

 

 

 

71

 

Total expenses

 

8,113

 

 

 

4,299

 

 

 

16,103

 

 

 

8,534

 

Other expenses

 

 

 

 

 

 

 

 

 

 

 

Interest expense

 

(41

)

 

 

(22

)

 

 

(82

)

 

 

(44

)

Net income

$

2,597

 

 

$

1,377

 

 

$

5,267

 

 

$

2,792

 

 

 

 

 

 

 

 

 

 

 

 

 

Depreciation and amortization

 

3,816

 

 

 

2,022

 

 

 

7,625

 

 

 

4,041

 

Interest expense

 

41

 

 

 

22

 

 

 

82

 

 

 

44

 

Tax expense

 

69

 

 

 

37

 

 

 

131

 

 

 

70

 

EBITDA

$

6,523

 

 

$

3,458

 

 

$

13,105

 

 

$

6,947

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income

$

2,597

 

 

$

1,377

 

 

$

5,267

 

 

$

2,792

 

Depreciation of real estate assets

 

3,785

 

 

 

2,006

 

 

 

7,564

 

 

 

4,008

 

FFO

$

6,382

 

 

$

3,383

 

 

$

12,831

 

 

$

6,800

 

Adjustments to FFO:

 

 

 

 

 

 

 

 

 

 

 

Depreciation of non-real estate assets

 

31

 

 

 

16

 

 

 

62

 

 

 

33

 

Core FFO

$

6,413

 

 

$

3,399

 

 

$

12,893

 

 

$

6,833

 

Adjustments to Core FFO:

 

 

 

 

 

 

 

 

 

 

 

Straight-line rent and other non-cash adjustments

 

45

 

 

 

24

 

 

 

90

 

 

 

48

 

Non-cash interest expense

 

41

 

 

 

21

 

 

 

82

 

 

 

43

 

Maintenance capital expenditures

 

(55

)

 

 

(30

)

 

 

(171

)

 

 

(91

)

Contractual tenant improvements

 

(29

)

 

 

(15

)

 

 

(29

)

 

 

(15

)

Cash Available for Distribution (CAD)

$

6,415

 

 

$

3,399

 

 

$

12,865

 

 

$

6,818

 

(1) The Company owns 53.0% of the properties through the unconsolidated joint venture.

14


Debt Schedules

(Unaudited, in thousands)

https://cdn.kscope.io/c2f297e3b97177682cf54fc1cd8550ee-img155105510_9.jpg 

 

 

Debt Instrument

Maturity Date

 

June 30, 2024
Interest Rate

June 30, 2024
Balance
(1)

 

June 30, 2024
Percent of
Total Indebtedness

Unsecured debt

 

 

 

 

 

 

2024 Revolving Credit facility

3-Jun-28(2)

 

S + 145 bps(3)

 

72,500

 

5.2%

2016 Term Loan facility

30-Jan-25

 

5.63%(4)

 

100,000

 

7.1%

2018 Term Loan facility

23-Jul-26

 

5.23%(5)

 

175,000

 

12.4%

2017 Series A Senior Notes

25-May-27

 

4.05%

 

95,000

 

6.7%

2017 Series B Senior Notes

25-May-29

 

4.15%

 

50,000

 

3.6%

2017 Series C Senior Notes

25-May-32

 

4.30%

 

30,000

 

2.1%

2019 Series A Senior Notes

12-Sep-29

 

3.73%

 

85,000

 

6.0%

2019 Series B Senior Notes

12-Sep-31

 

3.83%

 

100,000

 

7.1%

2019 Series C Senior Notes

12-Sep-34

 

3.98%

 

90,000

 

6.4%

2021 Series A Senior Notes

14-Oct-28

 

2.62%

 

50,000

 

3.6%

2021 Series B Senior Notes

14-Oct-30

 

2.89%

 

200,000

 

14.2%

2024 Series A Senior Notes

28-May-33

 

6.56%

 

150,000

 

10.7%

Total unsecured debt

5.3 years

 

4.52%

$

1,197,500

 

85.1%

 

(wtd-avg maturity)

 

(wtd-avg rate)

 

 

 

 

 

 

 

 

 

 

Secured mortgage debt

 

 

 

 

 

 

USFS II - Albuquerque

14-Jul-26

 

4.46%

 

10,635

 

0.8%

ICE - Charleston

15-Jan-27

 

4.21%

 

11,253

 

0.8%

VA - Loma Linda

6-Jul-27

 

3.59%

 

127,500

 

9.1%

CBP - Savannah

10-Jul-33

 

3.40%

 

9,119

 

0.6%

USCIS - Kansas City

6-Aug-24

 

3.68%

 

51,500

 

3.6%

Total secured mortgage debt

2.5 years

 

3.68%

$

210,007

 

14.9%

 

(wtd-avg maturity)

 

(wtd-avg rate)

 

 

 

(1) Excludes unamortized premiums / discounts and deferred financing fees.

(2) 2024 revolving credit facility has two six-month as-of-right extension options, subject to certain conditions and the payment of an extension fee.

(3) Our 2024 revolving credit facility is subject to one interest rate swap with an effective date of June 23, 2023 and a notional value of $100.0 million, of which $25.0 million is associated with our 2024 revolving credit facility, to effectively fix the interest rate at 5.46% annually. The spread over the secured overnight financing rate ("SOFR") is based on our consolidated leverage ratio, as defined in our 2024 revolving credit facility agreement. Additionally at June 30, 2024, $34.0 million of amounts outstanding under our 2024 revolving credit facility had a floating rate of 5.33% under USD Term SOFR and the remaining $13.5 million outstanding under our 2024 revolving credit facility had a floating rate of 5.31% under USD SOFR with a five day lookback.

(4) Calculated based on one interest rate swap with a notional value of $100.0 million, which effectively fixes the interest rate at 5.63% annually based on the Company’s current consolidated leverage ratio. The interest rate swap matures on December 23, 2024, which is not coterminous with the maturity date of the 2016 term loan facility.

(5) Calculated based on two interest rate swaps with an aggregate notional value of $200.0 million, which effectively fix the interest rate at 5.23% annually based on the Company’s current consolidated leverage ratio. The two interest rate swaps mature on June 29, 2025 and March 23, 2025, neither of which is coterminous with the maturity date of the 2018 term loan facility.

 

 

 

 

 

 

 

15


Debt Schedules (Cont.)

(Unaudited, in thousands)

https://cdn.kscope.io/c2f297e3b97177682cf54fc1cd8550ee-img155105510_9.jpg 

 

 

 

Debt Statistics

June 30, 2024

 

 

 

 

June 30, 2024

 

Variable rate debt - unhedged

$

47,500

 

 

% Variable rate debt - unhedged

 

3.4

%

Fixed rate debt

 

1,360,007

 

 

% Fixed rate debt(3)

 

96.6

%

Total Debt(1)

$

1,407,507

 

 

 

 

 

 

Less: cash and cash equivalents

 

(15,640

)

 

Weighted average maturity

4.9 years

 

Net Debt

$

1,391,867

 

 

Weighted average interest rate

 

4.4

%

Less: Adjustment for development(2)

 

(124,496

)

 

 

 

 

 

Adjusted Net Debt

$

1,267,371

 

 

 

 

 

 

(1) Excludes unamortized premiums / discounts and deferred financing fees.

(2) See definition of Adjusted Net Debt on Page 4.

(3) Includes the Company's 2016 and 2018 term loan facilities and $25.0 million associated with our 2024 revolving credit facility which are effectively swapped to fixed interest rates. Note the associated swaps are not coterminous with maturity dates of the respective term loan facilities. See Page 15 for further detail.

 

16


Debt Maturities

(Unaudited, in thousands)

https://cdn.kscope.io/c2f297e3b97177682cf54fc1cd8550ee-img155105510_10.jpg 

 

 

 

 

 

Secured Debt

 

 

Unsecured Debt

 

 

 

 

 

 

 

 

 

 

Year

 

Scheduled
Amortization

 

 

Scheduled
Maturities

 

 

Scheduled
Maturities

 

 

Total

 

 

Percentage of
Debt Maturing

 

 

Weighted Average
Interest Rate of
Scheduled Maturities

 

2024

 

 

2,209

 

 

 

51,500

 

 

 

-

 

 

 

53,709

 

 

 

3.8

%

 

 

3.68

%

2025

 

 

4,598

 

 

 

-

 

 

 

100,000

 

 

 

104,598

 

 

 

7.4

%

 

 

5.63

%

2026

 

 

3,686

 

 

 

6,368

 

 

 

175,000

 

 

 

185,054

 

 

 

13.1

%

 

 

5.19

%

2027

 

 

1,093

 

 

 

134,640

 

 

 

95,000

 

 

 

230,733

 

 

 

16.4

%

 

 

3.81

%

2028

 

 

983

 

 

 

-

 

 

 

122,500

 

 

 

123,483

 

 

 

8.8

%

 

 

4.81

%

2029

 

 

1,016

 

 

 

-

 

 

 

135,000

 

 

 

136,016

 

 

 

9.7

%

 

 

3.89

%

2030

 

 

1,049

 

 

 

-

 

 

 

200,000

 

 

 

201,049

 

 

 

14.3

%

 

 

2.89

%

2031

 

 

1,081

 

 

 

-

 

 

 

100,000

 

 

 

101,081

 

 

 

7.2

%

 

 

3.83

%

2032

 

 

1,116

 

 

 

-

 

 

 

30,000

 

 

 

31,116

 

 

 

2.2

%

 

 

4.30

%

2033

 

 

668

 

 

 

-

 

 

 

150,000

 

 

 

150,668

 

 

 

10.7

%

 

 

6.38

%

2034

 

 

-

 

 

 

-

 

 

 

90,000

 

 

 

90,000

 

 

 

6.4

%

 

 

3.98

%

Total

 

$

17,499

 

 

$

192,508

 

 

$

1,197,500

 

 

$

1,407,507

 

 

 

100.0

%

 

 

 

 

 

https://cdn.kscope.io/c2f297e3b97177682cf54fc1cd8550ee-img155105510_11.jpg 

17


Leased Operating Property Overview

(As of June 30, 2024, unaudited)

https://cdn.kscope.io/c2f297e3b97177682cf54fc1cd8550ee-img155105510_12.jpg 

 

 

 

Property Name

 

Location

 

Property Type

 

Tenant
Lease
Expiration
Year

 

Year Built /
Renovated

 

Leased
Square
Feet

 

 

Annualized
Lease
Income

 

 

Percentage
of Total
Annualized
Lease
Income

 

 

Annualized
Lease
Income per
Leased
Square Foot

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Wholly Owned U.S. Government Leased Properties

 

VA - Loma Linda

 

Loma Linda, CA

 

Outpatient Clinic

 

2036

 

2016

 

 

327,614

 

 

$

16,812,723

 

 

 

5.3

%

 

$

51.32

 

USCIS - Kansas City

 

Lee's Summit, MO

 

Office

 

2024 - 2042(1)

 

1969 / 1999

 

 

416,399

 

 

 

10,415,676

 

 

 

3.2

%

 

 

25.01

 

JSC - Suffolk

 

Suffolk, VA

 

Specialized Facility

 

2028(2)

 

1993 / 2004

 

 

403,737

 

 

 

8,480,871

 

 

 

2.6

%

 

 

21.01

 

Various GSA - Chicago

 

Des Plaines, IL

 

Office

 

2026

 

1971 / 1999

 

 

188,768

 

 

 

7,765,012

 

 

 

2.4

%

 

 

41.14

 

IRS - Fresno

 

Fresno, CA

 

Office

 

2033

 

2003

 

 

180,481

 

 

 

6,915,750

 

 

 

2.1

%

 

 

38.32

 

FBI - Salt Lake

 

Salt Lake City, UT

 

Specialized Facility

 

2032

 

2012

 

 

169,542

 

 

 

6,897,319

 

 

 

2.1

%

 

 

40.68

 

Various GSA - Portland

 

Portland, OR

 

Office

 

2024 - 2039(3)

 

2002

 

 

205,478

 

 

 

6,887,141

 

 

 

2.1

%

 

 

33.52

 

Various GSA - Buffalo

 

Buffalo, NY

 

Office

 

2025 - 2039

 

2004

 

 

273,678

 

 

 

6,838,564

 

 

 

2.1

%

 

 

24.99

 

VA - San Jose

 

San Jose, CA

 

Outpatient Clinic

 

2038

 

2018

 

 

90,085

 

 

 

5,809,456

 

 

 

1.8

%

 

 

64.49

 

EPA - Lenexa

 

Lenexa, KS

 

Office

 

2027(2)

 

2007 / 2012

 

 

169,585

 

 

 

5,732,732

 

 

 

1.8

%

 

 

33.80

 

FBI - Tampa

 

Tampa, FL

 

Specialized Facility

 

2040

 

2005

 

 

138,000

 

 

 

5,313,546

 

 

 

1.6

%

 

 

38.50

 

FBI - San Antonio

 

San Antonio, TX

 

Specialized Facility

 

2025

 

2007

 

 

148,584

 

 

 

5,207,961

 

 

 

1.6

%

 

 

35.05

 

FDA - Alameda

 

Alameda, CA

 

Laboratory

 

2039

 

2019

 

 

69,624

 

 

 

4,898,065

 

 

 

1.5

%

 

 

70.35

 

PTO - Arlington

 

Arlington, VA

 

Specialized Facility

 

2035

 

2009

 

 

190,546

 

 

 

4,683,980

 

 

 

1.4

%

 

 

24.58

 

FEMA - Tracy

 

Tracy, CA

 

Warehouse

 

2038

 

2018

 

 

210,373

 

 

 

4,650,065

 

 

 

1.4

%

 

 

22.10

 

FBI / DEA - El Paso

 

El Paso, TX

 

Specialized Facility

 

2028

 

1998 - 2005

 

 

203,683

 

 

 

4,637,353

 

 

 

1.4

%

 

 

22.77

 

FBI - Omaha

 

Omaha, NE

 

Specialized Facility

 

2024

 

2009

 

 

112,196

 

 

 

4,435,692

 

 

 

1.4

%

 

 

39.54

 

TREAS - Parkersburg

 

Parkersburg, WV

 

Office

 

2041

 

2004 / 2006

 

 

182,500

 

 

 

4,377,637

 

 

 

1.3

%

 

 

23.99

 

FDA - Lenexa

 

Lenexa, KS

 

Laboratory

 

2040

 

2020

 

 

59,690

 

 

 

4,246,148

 

 

 

1.3

%

 

 

71.14

 

VA - South Bend

 

Mishakawa, IN

 

Outpatient Clinic

 

2032

 

2017

 

 

86,363

 

 

 

4,131,084

 

 

 

1.3

%

 

 

47.83

 

FBI - Pittsburgh

 

Pittsburgh, PA

 

Specialized Facility

 

2027

 

2001

 

 

100,054

 

 

 

4,079,780

 

 

 

1.3

%

 

 

40.78

 

ICE - Dallas

 

Irvine, TX

 

Specialized Facility

 

2032 / 2040(4)

 

2000 / 2020

 

 

129,046

 

 

 

4,055,474

 

 

 

1.2

%

 

 

31.43

 

VA - Mobile

 

Mobile, AL

 

Outpatient Clinic

 

2033

 

2018

 

 

79,212

 

 

 

4,004,722

 

 

 

1.2

%

 

 

50.56

 

USCIS - Lincoln

 

Lincoln, NE

 

Office

 

2025

 

2005

 

 

137,671

 

 

 

3,968,833

 

 

 

1.2

%

 

 

28.83

 

FBI - New Orleans

 

New Orleans, LA

 

Specialized Facility

 

2029(5)

 

1999 / 2006

 

 

137,679

 

 

 

3,918,628

 

 

 

1.2

%

 

 

28.46

 

DOT - Lakewood

 

Lakewood, CO

 

Office

 

2039

 

2004

 

 

116,046

 

 

 

3,685,022

 

 

 

1.1

%

 

 

31.75

 

FBI - Albany

 

Albany, NY

 

Specialized Facility

 

2036

 

1998

 

 

69,476

 

 

 

3,634,460

 

 

 

1.1

%

 

 

52.31

 

FBI - Knoxville

 

Knoxville, TN

 

Specialized Facility

 

2025

 

2010

 

 

99,130

 

 

 

3,596,289

 

 

 

1.1

%

 

 

36.28

 

FBI - Birmingham

 

Birmingham, AL

 

Specialized Facility

 

2042

 

2005

 

 

96,278

 

 

 

3,564,008

 

 

 

1.1

%

 

 

37.02

 

EPA - Kansas City

 

Kansas City, KS

 

Laboratory

 

2043

 

2003

 

 

55,833

 

 

 

3,546,791

 

 

 

1.1

%

 

 

63.52

 

ICE - Charleston

 

North Charleston, SC

 

Specialized Facility

 

2027

 

1994 / 2012

 

 

65,124

 

 

 

3,362,481

 

 

 

1.0

%

 

 

51.63

 

USFS II - Albuquerque

 

Albuquerque, NM

 

Office

 

2026(2)

 

2011

 

 

98,720

 

 

 

3,340,671

 

 

 

1.0

%

 

 

33.84

 

FBI - Richmond

 

Richmond, VA

 

Specialized Facility

 

2041

 

2001

 

 

96,607

 

 

 

3,334,875

 

 

 

1.0

%

 

 

34.52

 

VA - Chico

 

Chico, CA

 

Outpatient Clinic

 

2034

 

2019

 

 

51,647

 

 

 

3,330,260

 

 

 

1.0

%

 

 

64.48

 

JUD - Del Rio

 

Del Rio, TX

 

Federal Courthouse

 

2041

 

1992 / 2004

 

 

89,880

 

 

 

3,291,972

 

 

 

1.0

%

 

 

36.63

 

USFS I - Albuquerque

 

Albuquerque, NM

 

Office

 

2026

 

2006

 

 

92,455

 

 

 

3,269,997

 

 

 

1.0

%

 

 

35.37

 

DEA - Sterling

 

Sterling, VA

 

Laboratory

 

2038

 

2001

 

 

57,692

 

 

 

3,222,788

 

 

 

1.0

%

 

 

55.86

 

 

 

18


Leased Operating Property Overview (Cont.)

(As of June 30, 2024, unaudited)

https://cdn.kscope.io/c2f297e3b97177682cf54fc1cd8550ee-img155105510_12.jpg 

 

 

Property Name

 

Location

 

Property Type

 

Tenant
Lease
Expiration
Year

 

Year Built /
Renovated

 

Leased
Square
Feet

 

 

Annualized
Lease
Income

 

 

Percentage
of Total
Annualized
Lease
Income

 

 

Annualized
Lease
Income per
Leased
Square Foot

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Wholly Owned U.S. Government Leased Properties (Cont.)

 

FBI - Little Rock

 

Little Rock, AR

 

Specialized Facility

 

2041

 

2001

 

 

102,377

 

 

 

3,217,259

 

 

 

1.0

%

 

 

31.43

 

DEA - Vista

 

Vista, CA

 

Laboratory

 

2035

 

2002

 

 

52,293

 

 

 

3,130,468

 

 

 

1.0

%

 

 

59.86

 

USCIS - Tustin

 

Tustin, CA

 

Office

 

2034

 

1979 / 2019

 

 

66,818

 

 

 

3,116,164

 

 

 

1.0

%

 

 

46.64

 

VA - Orange

 

Orange, CT

 

Outpatient Clinic

 

2034

 

2019

 

 

56,330

 

 

 

2,991,463

 

 

 

0.9

%

 

 

53.11

 

VA - Indianapolis

 

Brownsburg, IN

 

Outpatient Clinic

 

2041

 

2021

 

 

80,000

 

 

 

2,981,475

 

 

 

0.9

%

 

 

37.27

 

ICE - Albuquerque

 

Albuquerque, NM

 

Specialized Facility

 

2027

 

2011

 

 

71,100

 

 

 

2,841,468

 

 

 

0.9

%

 

 

39.96

 

SSA - Charleston

 

Charleston, WV

 

Office

 

2029

 

1959 / 2000

 

 

110,000

 

 

 

2,806,152

 

 

 

0.9

%

 

 

25.51

 

FBI - Mobile

 

Mobile, AL

 

Specialized Facility

 

2029(2)

 

2001

 

 

76,112

 

 

 

2,802,776

 

 

 

0.9

%

 

 

36.82

 

JUD - El Centro

 

El Centro, CA

 

Federal Courthouse

 

2034

 

2004

 

 

43,345

 

 

 

2,800,983

 

 

 

0.9

%

 

 

64.62

 

DEA - Dallas Lab

 

Dallas, TX

 

Laboratory

 

2038

 

2001

 

 

49,723

 

 

 

2,786,394

 

 

 

0.9

%

 

 

56.04

 

DEA - Pleasanton

 

Pleasanton, CA

 

Laboratory

 

2035

 

2015

 

 

42,480

 

 

 

2,775,202

 

 

 

0.9

%

 

 

65.33

 

DEA - Upper Marlboro

 

Upper Marlboro, MD

 

Laboratory

 

2037

 

2002

 

 

50,978

 

 

 

2,758,955

 

 

 

0.8

%

 

 

54.12

 

NARA - Broomfield

 

Broomfield, CO

 

Warehouse

 

2032

 

2012

 

 

161,730

 

 

 

2,690,321

 

 

 

0.8

%

 

 

16.63

 

DHS - Atlanta

 

Atlanta, GA

 

Specialized Facility

 

2031 - 2038(6)

 

2008 / 2023

 

 

91,185

 

 

 

2,628,538

 

 

 

0.8

%

 

 

28.83

 

TREAS - Birmingham

 

Birmingham, AL

 

Office

 

2029

 

2014

 

 

83,676

 

 

 

2,618,611

 

 

 

0.8

%

 

 

31.29

 

USAO - Louisville

 

Louisville, KY

 

Specialized Facility

 

2031

 

2011

 

 

60,000

 

 

 

2,550,159

 

 

 

0.8

%

 

 

42.50

 

JUD - Charleston

 

Charleston, SC

 

Federal Courthouse

 

2040

 

1999

 

 

52,339

 

 

 

2,522,970

 

 

 

0.8

%

 

 

48.20

 

JUD - Jackson

 

Jackson, TN

 

Federal Courthouse

 

2043

 

1998

 

 

75,043

 

 

 

2,386,456

 

 

 

0.7

%

 

 

31.80

 

CBP - Savannah

 

Savannah, GA

 

Laboratory

 

2033

 

2013

 

 

35,000

 

 

 

2,283,810

 

 

 

0.7

%

 

 

65.25

 

DEA - Dallas

 

Dallas, TX

 

Specialized Facility

 

2041

 

2001

 

 

71,827

 

 

 

2,270,186

 

 

 

0.7

%

 

 

31.61

 

Various GSA - Cleveland

 

Brooklyn Heights, OH

 

Office

 

2028 - 2040(7)

 

1981 / 2021

 

 

61,384

 

 

 

2,237,124

 

 

 

0.7

%

 

 

36.44

 

NWS - Kansas City

 

Kansas City, MO

 

Specialized Facility

 

2033(2)

 

1998 / 2020

 

 

94,378

 

 

 

2,151,911

 

 

 

0.7

%

 

 

22.80

 

NPS - Omaha

 

Omaha, NE

 

Specialized Facility

 

2029

 

2004

 

 

62,772

 

 

 

2,018,680

 

 

 

0.6

%

 

 

32.16

 

DEA - Santa Ana

 

Santa Ana, CA

 

Specialized Facility

 

2029

 

2004

 

 

39,905

 

 

 

2,013,833

 

 

 

0.6

%

 

 

50.47

 

DEA - North Highlands

 

Sacramento, CA

 

Specialized Facility

 

2033

 

2002

 

 

37,975

 

 

 

1,927,123

 

 

 

0.6

%

 

 

50.75

 

GSA - Clarksburg

 

Clarksburg, WV

 

Office

 

2039(2)

 

1999

 

 

70,495

 

 

 

1,880,219

 

 

 

0.6

%

 

 

26.67

 

VA - Golden

 

Golden, CO

 

Warehouse

 

2026

 

1996 / 2011

 

 

56,753

 

 

 

1,772,202

 

 

 

0.5

%

 

 

31.23

 

JUD - Newport News

 

Newport News, VA

 

Federal Courthouse

 

2033

 

2008

 

 

35,005

 

 

 

1,670,583

 

 

 

0.5

%

 

 

47.72

 

ICE - Orlando

 

Orlando, FL

 

Specialized Facility

 

2040

 

1996 / 2010

 

 

49,420

 

 

 

1,670,292

 

 

 

0.5

%

 

 

33.80

 

USCG - Martinsburg

 

Martinsburg, WV

 

Specialized Facility

 

2027

 

2007

 

 

59,547

 

 

 

1,619,785

 

 

 

0.5

%

 

 

27.20

 

JUD - Aberdeen

 

Aberdeen, MS

 

Federal Courthouse

 

2025

 

2005

 

 

46,979

 

 

 

1,569,061

 

 

 

0.5

%

 

 

33.40

 

VA - Charleston

 

North Charleston, SC

 

Warehouse

 

2024 / 2040

 

2020

 

 

102,718

 

 

 

1,553,988

 

 

 

0.5

%

 

 

15.13

 

DEA - Albany

 

Albany, NY

 

Specialized Facility

 

2042

 

2004

 

 

31,976

 

 

 

1,405,541

 

 

 

0.4

%

 

 

43.96

 

USAO - Springfield

 

Springfield, IL

 

Specialized Facility

 

2038

 

2002

 

 

43,600

 

 

 

1,391,454

 

 

 

0.4

%

 

 

31.91

 

DEA - Riverside

 

Riverside, CA

 

Specialized Facility

 

2032

 

1997

 

 

34,354

 

 

 

1,318,814

 

 

 

0.4

%

 

 

38.39

 

JUD - Council Bluffs

 

Council Bluffs, IA

 

Federal Courthouse

 

2041(7)

 

2021

 

 

28,900

 

 

 

1,288,309

 

 

 

0.4

%

 

 

44.58

 

DEA - Birmingham

 

Birmingham, AL

 

Specialized Facility

 

2038

 

2005

 

 

35,616

 

 

 

1,251,695

 

 

 

0.4

%

 

 

35.14

 

 

 

19


Leased Operating Property Overview (Cont.)

(As of June 30, 2024, unaudited)

https://cdn.kscope.io/c2f297e3b97177682cf54fc1cd8550ee-img155105510_12.jpg 

 

 

Property Name

 

Location

 

Property Type

 

Tenant
Lease
Expiration
Year

 

Year Built /
Renovated

 

Leased
Square
Feet

 

 

Annualized
Lease
Income

 

 

Percentage
of Total
Annualized
Lease
Income

 

 

Annualized
Lease
Income per
Leased
Square Foot

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Wholly Owned U.S. Government Leased Properties (Cont.)

 

SSA - Dallas

 

Dallas, TX

 

Specialized Facility

 

2035

 

2005

 

 

27,200

 

 

 

1,061,704

 

 

 

0.3

%

 

 

39.03

 

HSI - Orlando

 

Orlando, FL

 

Specialized Facility

 

2036

 

2006

 

 

27,840

 

 

 

1,054,225

 

 

 

0.3

%

 

 

37.87

 

JUD - South Bend

 

South Bend, IN

 

Federal Courthouse

 

2027

 

1996 / 2011

 

 

30,119

 

 

 

795,203

 

 

 

0.2

%

 

 

26.40

 

ICE - Louisville

 

Louisville, KY

 

Specialized Facility

 

2036

 

2011

 

 

17,420

 

 

 

661,535

 

 

 

0.2

%

 

 

37.98

 

DEA - San Diego

 

San Diego, CA

 

Warehouse

 

2032

 

1999

 

 

16,100

 

 

 

560,224

 

 

 

0.2

%

 

 

34.80

 

DEA - Bakersfield

 

Bakersfield, CA

 

Specialized Facility

 

2038

 

2000

 

 

9,800

 

 

 

492,966

 

 

 

0.2

%

 

 

50.30

 

SSA - San Diego

 

San Diego, CA

 

Specialized Facility

 

2032

 

2003

 

 

10,059

 

 

 

448,019

 

 

 

0.1

%

 

 

44.54

 

ICE - Otay

 

San Diego, CA

 

Office

 

2027

 

2001

 

 

7,434

 

 

 

260,934

 

 

 

0.1

%

 

 

35.10

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Subtotal

 

 

 

 

 

 

 

 

 

 

7,869,581

 

 

$

279,379,060

 

 

 

85.8

%

 

$

35.50

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Wholly Owned State and Local Government Leased Property

 

CA - Anaheim

 

Anaheim, CA

 

Office

 

2033 / 2034

 

1991 / 2020

 

 

95,273

 

 

 

3,364,379

 

 

 

1.0

%

 

 

35.31

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Subtotal

 

 

 

 

 

 

 

 

 

 

95,273

 

 

$

3,364,379

 

 

 

1.0

%

 

$

35.31

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Wholly Owned Privately Leased Property

 

501 East Hunter Street - Lummus Corporation

 

Lubbock, TX

 

Warehouse

 

2028(7)

 

2013

 

 

70,078

 

 

 

412,024

 

 

 

0.1

%

 

 

5.88

 

Subtotal

 

 

 

 

 

 

 

 

 

 

70,078

 

 

$

412,024

 

 

 

0.1

%

 

$

5.88

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Wholly Owned Properties Total / Weighted Average

 

 

 

 

8,034,932

 

 

$

283,155,463

 

 

 

86.9

%

 

$

35.24

 

 

 

20


Leased Operating Property Overview (Cont.)

(As of June 30, 2024, unaudited)

https://cdn.kscope.io/c2f297e3b97177682cf54fc1cd8550ee-img155105510_12.jpg 

 

 

Property Name

 

Location

 

Property Type

 

Tenant
Lease
Expiration
Year

 

Year Built /
Renovated

 

Leased
Square
Feet

 

 

Annualized
Lease
Income

 

 

Percentage
of Total
Annualized
Lease
Income

 

 

Annualized
Lease
Income per
Leased
Square Foot

 

U.S Government Leased to Unconsolidated Real Estate Venture

 

VA - Phoenix(8)

 

Phoenix, AZ

 

Outpatient Clinic

 

2042

 

2022

 

 

257,294

 

 

 

10,735,555

 

 

 

3.3

%

 

 

41.72

 

VA - San Antonio(8)

 

San Antonio, TX

 

Outpatient Clinic

 

2041

 

2021

 

 

226,148

 

 

 

9,221,036

 

 

 

2.8

%

 

 

40.77

 

VA - Chattanooga(8)

 

Chattanooga, TN

 

Outpatient Clinic

 

2035

 

2020

 

 

94,566

 

 

 

4,369,452

 

 

 

1.3

%

 

 

46.21

 

VA - Lubbock(8)(9)

 

Lubbock, TX

 

Outpatient Clinic

 

2040

 

2020

 

 

120,916

 

 

 

4,248,831

 

 

 

1.3

%

 

 

35.14

 

VA - Marietta(8)

 

Marietta, GA

 

Outpatient Clinic

 

2041

 

2021

 

 

76,882

 

 

 

3,946,163

 

 

 

1.2

%

 

 

51.33

 

VA - Birmingham(8)

 

Irondale, AL

 

Outpatient Clinic

 

2041

 

2021

 

 

77,128

 

 

 

3,175,571

 

 

 

1.0

%

 

 

41.17

 

VA - Corpus Christi(8)

 

Corpus Christi, TX

 

Outpatient Clinic

 

2042

 

2022

 

 

69,276

 

 

 

2,938,590

 

 

 

0.9

%

 

 

42.42

 

VA - Columbus(8)

 

Columbus, GA

 

Outpatient Clinic

 

2042

 

2022

 

 

67,793

 

 

 

2,917,896

 

 

 

0.9

%

 

 

43.04

 

VA - Lenexa(8)

 

Lenexa, KS

 

Outpatient Clinic

 

2041

 

2021

 

 

31,062

 

 

 

1,328,375

 

 

 

0.4

%

 

 

42.77

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Subtotal

 

 

 

 

 

 

 

 

 

 

1,021,065

 

 

$

42,881,469

 

 

 

13.1

%

 

$

42.00

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total / Weighted Average

 

 

9,055,997

 

 

$

326,036,932

 

 

 

100.0

%

 

$

36.00

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total / Weighted Average at Easterly's Share

 

 

 

 

 

 

8,576,095

 

 

$

305,882,642

 

 

 

 

 

$

35.67

 

(1) 316,318 square feet leased to U.S. Citizenship and Immigration Services ("USCIS") will expire on February 19, 2042 and contains two five-year renewal options. 88,672 square feet leased to four private tenants will expire between 2024-2028 and each contains renewal options.

(2) Lease contains one five-year renewal option.

(3) 37,811 square feet leased to the U.S. Army Corps of Engineers ("ACOE") will expire on February 19, 2025 and contains two five-year renewal options. 21,646 square feet leased to the Federal Bureau of Investigation ("FBI") will expire on December 31, 2024 and contains two five-year renewal options. 11,061 square feet leased to five private tenants will expire between 2025-2030 and each contains renewal options. 4,846 square feet leased to the Department of Energy ("DOE") will expire on April 14, 2033 and contains one ten-year renewal option.

(4) 80,523 square feet leased to the U.S. Immigration and Customs Enforcement ("ICE") will expire on September 14, 2040. 29,074 square feet leased to a private tenant will expire on September 30, 2032 and contains one five-year renewal option. 19,449 square feet leased to a private tenant will expire on January 31, 2032 and contains one five-year renewal option.

(5) Lease contains one ten-year renewal option.

(6) 29,737 square feet leased to the U.S. Customs and Border Protection ("CBP") will expire on April 30, 2038. 17,373 square feet leased to a private tenant will expire on December 31, 2031 and contains two five-year renewal options. 44,075 square feet leased to the Transportation Security Administration ("TSA") will expire on December 14, 2038 and contains one five-year renewal option.

(7) Lease contains two five-year renewal options.

(8) The Company owns 53.0% of the property through an unconsolidated joint venture.

(9) Asset is subject to a ground lease where the Company is the lessee.

21


Tenants

(As of June 30, 2024, unaudited)

https://cdn.kscope.io/c2f297e3b97177682cf54fc1cd8550ee-img155105510_13.jpg 

 

 

 

Tenant

 

Weighted
Average
Remaining
Lease Term
(1)

 

 

Leased
Square Feet

 

 

Percentage
of Leased
Square Feet

 

 

Annualized
Lease Income

 

 

Percentage
of Total
Annualized
Lease
Income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S. Government

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Department of Veteran Affairs ("VA")

 

 

14.2

 

 

 

2,058,031

 

 

 

22.6

%

 

$

88,877,202

 

 

 

27.3

%

Federal Bureau of Investigation ("FBI")

 

 

7.9

 

 

 

1,498,607

 

 

 

16.5

%

 

 

53,616,325

 

 

 

16.4

%

Drug Enforcement Administration ("DEA")

 

 

11.2

 

 

 

607,290

 

 

 

6.7

%

 

 

27,896,535

 

 

 

8.6

%

Judiciary of the U.S. ("JUD")

 

 

12.9

 

 

 

401,610

 

 

 

4.4

%

 

 

16,325,537

 

 

 

5.0

%

U.S. Citizenship and Immigration Services ("USCIS")

 

 

12.3

 

 

 

520,807

 

 

 

5.8

%

 

 

15,022,935

 

 

 

4.6

%

Immigration and Customs Enforcement ("ICE")

 

 

9.3

 

 

 

313,837

 

 

 

3.5

%

 

 

12,149,750

 

 

 

3.7

%

Environmental Protection Agency ("EPA")

 

 

7.2

 

 

 

225,418

 

 

 

2.5

%

 

 

9,279,523

 

 

 

2.8

%

Food and Drug Administration ("FDA")

 

 

15.7

 

 

 

129,314

 

 

 

1.4

%

 

 

9,144,213

 

 

 

2.8

%

U.S. Joint Staff Command ("JSC")

 

 

3.9

 

 

 

403,737

 

 

 

4.5

%

 

 

8,480,871

 

 

 

2.6

%

Internal Revenue Service ("IRS")

 

 

9.1

 

 

 

233,334

 

 

 

2.6

%

 

 

8,005,080

 

 

 

2.5

%

Federal Aviation Administration ("FAA")

 

 

2.3

 

 

 

188,768

 

 

 

2.1

%

 

 

7,765,012

 

 

 

2.4

%

Bureau of the Fiscal Service ("BFS")

 

 

13.2

 

 

 

266,176

 

 

 

2.9

%

 

 

6,996,248

 

 

 

2.1

%

U.S. Forest Service ("USFS")

 

 

1.9

 

 

 

191,175

 

 

 

2.1

%

 

 

6,610,668

 

 

 

2.0

%

Social Security Administration ("SSA")

 

 

8.5

 

 

 

192,185

 

 

 

2.1

%

 

 

5,514,092

 

 

 

1.7

%

Patent and Trademark Office ("PTO")

 

 

10.5

 

 

 

190,546

 

 

 

2.1

%

 

 

4,683,980

 

 

 

1.4

%

Federal Emergency Management Agency ("FEMA")

 

 

14.3

 

 

 

210,373

 

 

 

2.3

%

 

 

4,650,065

 

 

 

1.4

%

U.S. Attorney Office ("USAO")

 

 

10.4

 

 

 

110,776

 

 

 

1.2

%

 

 

4,133,012

 

 

 

1.3

%

Department of Transportation ("DOT")

 

 

14.2

 

 

 

123,480

 

 

 

1.4

%

 

 

3,945,956

 

 

 

1.2

%

Customs and Border Protection ("CBP")

 

 

11.2

 

 

 

64,737

 

 

 

0.7

%

 

 

3,221,235

 

 

 

1.0

%

National Archives and Records Administration ("NARA")

 

 

7.9

 

 

 

161,730

 

 

 

1.8

%

 

 

2,690,321

 

 

 

0.8

%

National Weather Service ("NWS")

 

 

9.5

 

 

 

94,378

 

 

 

1.0

%

 

 

2,151,911

 

 

 

0.7

%

National Park Service ("NPS")

 

 

5.0

 

 

 

62,772

 

 

 

0.7

%

 

 

2,018,680

 

 

 

0.6

%

U.S. Department of Agriculture ("USDA")

 

 

3.6

 

 

 

60,257

 

 

 

0.7

%

 

 

1,909,390

 

 

 

0.6

%

General Services Administration - Other

 

 

1.2

 

 

 

55,807

 

 

 

0.6

%

 

 

1,797,557

 

 

 

0.6

%

U.S. Coast Guard ("USCG")

 

 

3.5

 

 

 

59,547

 

 

 

0.7

%

 

 

1,619,785

 

 

 

0.5

%

National Oceanic and Atmospheric Administration ("NOAA")

 

 

7.2

 

 

 

33,403

 

 

 

0.4

%

 

 

1,423,916

 

 

 

0.4

%

Transportation Security Administration ("TSA")

 

 

9.5

 

 

 

44,075

 

 

 

0.5

%

 

 

1,155,260

 

 

 

0.4

%

U.S. Army Corps of Engineers ("ACOE")

 

 

0.6

 

 

 

39,320

 

 

 

0.4

%

 

 

1,147,120

 

 

 

0.4

%

Homeland Security Investigations ("HSI")

 

 

11.7

 

 

 

27,840

 

 

 

0.3

%

 

 

1,054,225

 

 

 

0.3

%

 

 

22


Tenants (Cont.)

(As of June 30, 2024, unaudited)

https://cdn.kscope.io/c2f297e3b97177682cf54fc1cd8550ee-img155105510_13.jpg 

 

 

Tenant

 

Weighted
Average
Remaining
Lease Term
(1)

 

 

Leased
Square Feet

 

 

Percentage
of Leased
Square Feet

 

 

Annualized
Lease Income

 

 

Percentage
of Total
Annualized
Lease
Income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S. Government (Cont.)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Small Business Administration ("SBA")

 

 

15.1

 

 

 

44,969

 

 

 

0.5

%

 

 

1,037,311

 

 

 

0.3

%

Bureau of Alcohol, Tobacco, Firearms and Explosives ("ATF")

 

 

8.7

 

 

 

23,775

 

 

 

0.3

%

 

 

732,833

 

 

 

0.2

%

Federal Energy Regulatory Commission ("FERC")

 

 

15.1

 

 

 

6,214

 

 

 

0.1

%

 

 

246,845

 

 

 

0.1

%

Department of Energy ("DOE")

 

 

8.8

 

 

 

4,846

 

 

 

0.1

%

 

 

187,782

 

 

 

0.1

%

U.S. Probation Office ("USPO")

 

 

14.6

 

 

 

6,621

 

 

 

0.1

%

 

 

176,606

 

 

 

0.1

%

U.S. Marshals Service ("USMS")

 

 

2.6

 

 

 

1,054

 

 

 

0.0

%

 

 

50,405

 

 

 

0.0

%

Department of Labor ("DOL")

 

 

14.6

 

 

 

574

 

 

 

0.0

%

 

 

15,316

 

 

 

0.0

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Subtotal

 

 

10.3

 

 

 

8,657,383

 

 

 

95.6

%

 

$

315,733,502

 

 

 

96.9

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

State and Local Government

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

State of California Employee Development Department

 

 

9.6

 

 

 

65,133

 

 

 

0.7

%

 

 

2,296,631

 

 

 

0.7

%

State of California Department of Industrial Relations

 

 

9.3

 

 

 

30,140

 

 

 

0.3

%

 

 

1,067,748

 

 

 

0.3

%

New York State Court of Claims

 

 

2.3

 

 

 

14,274

 

 

 

0.2

%

 

 

391,875

 

 

 

0.1

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Subtotal

 

 

8.6

 

 

 

109,547

 

 

 

1.2

%

 

$

3,756,254

 

 

 

1.1

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Private Tenants

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other Private Tenants

 

 

4.3

 

 

 

96,539

 

 

 

1.1

%

 

 

2,666,093

 

 

 

0.8

%

St. Luke's Health System

 

 

2.5

 

 

 

32,043

 

 

 

0.4

%

 

 

1,002,196

 

 

 

0.3

%

CVS Health

 

 

0.9

 

 

 

39,690

 

 

 

0.4

%

 

 

886,941

 

 

 

0.3

%

HUB International Midwest Limited

 

 

8.3

 

 

 

29,074

 

 

 

0.3

%

 

 

836,920

 

 

 

0.3

%

Providence Health & Services

 

 

1.2

 

 

 

21,643

 

 

 

0.2

%

 

 

743,002

 

 

 

0.2

%

Lummus Corporation

 

 

4.1

 

 

 

70,078

 

 

 

0.8

%

 

 

412,024

 

 

 

0.1

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Subtotal

 

 

3.8

 

 

 

289,067

 

 

 

3.2

%

 

$

6,547,176

 

 

 

2.0

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total / Weighted Average

 

 

10.1

 

 

 

9,055,997

 

 

 

100.0

%

 

$

326,036,932

 

 

 

100.0

%

 

(1) Weighted based on leased square feet.

 

 

23


Lease Expirations

(As of June 30, 2024, unaudited)

https://cdn.kscope.io/c2f297e3b97177682cf54fc1cd8550ee-img155105510_14.jpg 

 

 

 

 

Year of Lease Expiration

 

Number of
Leases
Expiring

 

Leased Square
Footage
Expiring

 

 

Percentage of
Total Leased Square
Footage
Expiring

 

 

Annualized
Lease Income
Expiring

 

 

Percentage of
Total
Annualized
Lease Income
Expiring

 

 

Annualized
Lease Income
per Leased
Square Foot Expiring

 

2024

 

4

 

 

152,063

 

 

 

1.7

%

 

 

5,403,915

 

 

 

1.7

%

 

 

35.54

 

2025

 

13

 

 

597,180

 

 

 

6.6

%

 

 

19,237,543

 

 

 

5.9

%

 

 

32.21

 

2026

 

6

 

 

483,013

 

 

 

5.3

%

 

 

17,541,953

 

 

 

5.4

%

 

 

36.32

 

2027

 

9

 

 

506,510

 

 

 

5.6

%

 

 

18,822,530

 

 

 

5.8

%

 

 

37.16

 

2028

 

11

 

 

802,397

 

 

 

8.9

%

 

 

17,549,356

 

 

 

5.4

%

 

 

21.87

 

2029

 

6

 

 

510,144

 

 

 

5.6

%

 

 

16,178,680

 

 

 

5.0

%

 

 

31.71

 

2030

 

1

 

 

1,536

 

 

 

0.0

%

 

 

59,180

 

 

 

0.0

%

 

 

38.53

 

2031

 

3

 

 

117,875

 

 

 

1.3

%

 

 

4,608,435

 

 

 

1.4

%

 

 

39.10

 

2032

 

9

 

 

579,524

 

 

 

6.4

%

 

 

18,608,758

 

 

 

5.7

%

 

 

32.11

 

2033

 

10

 

 

566,197

 

 

 

6.3

%

 

 

22,247,529

 

 

 

6.8

%

 

 

39.29

 

Thereafter

 

58

 

 

4,739,558

 

 

 

52.3

%

 

 

185,779,053

 

 

 

56.9

%

 

 

39.20

 

Total / Weighted Average

 

130

 

 

9,055,997

 

 

 

100.0

%

 

$

326,036,932

 

 

 

100.0

%

 

$

36.00

 

https://cdn.kscope.io/c2f297e3b97177682cf54fc1cd8550ee-img155105510_15.jpg 

24


Summary of Re/Development Projects

(As of June 30, 2024, unaudited, in thousands, except square feet)

https://cdn.kscope.io/c2f297e3b97177682cf54fc1cd8550ee-img155105510_16.jpg 

 

 

 

Projects Under Construction(1)

Property Name

 

Location

 

 

Property Type

 

 

Total Leased Square Feet

 

 

Lease Term

 

 

Anticipated Total Cost

 

 

Cost to Date

 

 

Anticipated Lump-Sum Reimbursement(2)

 

 

Anticipated Completion Date

 

Anticipated Lease Commencement

FDA - Atlanta

 

Atlanta, GA

 

 

Laboratory

 

 

 

162,000

 

 

20-Year

 

 

$

235,436

 

 

$

122,672

 

 

$

150,680

 

 

4Q 2025

 

4Q 2025

Total

 

 

 

 

 

 

 

 

162,000

 

 

 

 

 

$

235,436

 

 

$

122,672

 

 

$

150,680

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Projects in Design(3)

 

 

 

 

 

 

 

 

Property Name

 

Location

 

 

Property Type

 

 

Total Estimated Leased Square Feet

 

 

Lease Term

 

 

Anticipated Completion Date

 

 

Anticipated Lease Commencement

 

 

 

 

 

 

 

 

JUD - Flagstaff

 

 Flagstaff, AZ

 

 

 Courthouse

 

 

 

50,777

 

 

20-Year

 

 

2Q 2026

 

 

2Q 2026

 

 

 

 

 

 

 

 

Total

 

 

 

 

 

 

 

 

50,777

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Projects Previously Completed with Outstanding Lump-Sum Reimbursements(2)

 

 

 

 

 

Property Name

 

Location

 

 

Property Type

 

 

Total Leased Square Feet

 

 

Lease Term

 

 

Outstanding Lump-Sum Reimbursement(2)

 

 

Completion Date

 

 

Lease Commencement

 

 

 

 

 

 N/A

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

$

-

 

 

 

-

 

 

 

-

 

 

 

 

 

 

(1) Includes properties under construction for which design is complete.

(2) Includes reimbursement of lump-sum tenant improvement costs and development fees.

(3) Includes projects in the design phase for which project scope is not fully determined.

25