dea-8k_20180301.htm

 

 

 

 

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):

March 1, 2018

 

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.)

 

 

 

2101 L Street NW, Suite 650, Washington, D.C.

 

20037

(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))

 

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 March 1, 2018, we issued a press release announcing our results of operations for the fourth quarter and year ended December 31, 2017. 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 10:00 a.m. Eastern Standard time on March 1, 2018, to review our fourth quarter and year ended 2017 performance, discuss recent events and conduct a question-and-answer session. The number to call is 1-877-705-6003 (domestic) and 1-201-493-6725 (international). A live webcast will be available in the Investor Relations section of our website.  A replay of the conference call will be available through March 15, 2018, by dialing 1-844-512-2921 (domestic) and 1-412-317-6671 (international) and entering the passcode 13676248. 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 March 1, 2018.

 

 

99.2

  

Easterly Government Properties, Inc. Supplemental Information Package for the quarter and year ended December 31, 2017.

 


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/ William C. Trimble, III

Name:

 

William C. Trimble, III

Title:

 

Chief Executive Officer and President

Date: March 1, 2018

 

 

dea-ex991_7.htm

 

Exhibit 99.1

 

 

EASTERLY GOVERNMENT PROPERTIES

REPORTS FOURTH QUARTER AND FULL YEAR 2017 RESULTS

 

 

WASHINGTON, D.C. – March 1, 2018 – 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 and full year ended December 31, 2017.  

 

Highlights for the Quarter Ended December 31, 2017:

 

Net income of $1.5 million, or $0.03 per share on a fully diluted basis

 

FFO of $16.6 million, or $0.32 per share on a fully diluted basis

 

FFO, as Adjusted of $14.3 million, or $0.27 per share on a fully diluted basis

 

CAD of $12.1 million

 

Completed the acquisition of a Department of Veterans Affairs (VA) outpatient clinic just outside of South Bend, Indiana

 

Purchased the re-development rights to a 210,373 square foot Federal Emergency Management Agency (FEMA) distribution center in Tracy, California (“FEMA - Tracy”)

 

Portfolio occupancy at 100%

 

Highlights for the Year Ended December 31, 2017:

 

Net income of $5.4 million, or $0.11 per share on a fully diluted basis

 

FFO of $60.6 million, or $1.26 per share on a fully diluted basis

 

FFO, as Adjusted of $54.8 million, or $1.14 per share on a fully diluted basis

 

Completed four accretive acquisitions with an aggregate purchase price of approximately $385 million

 

Acquired an Occupational Safety and Health Administration (OSHA) laboratory in Sandy, Utah, two VA outpatient facilities in Loma Linda, California and just outside of South Bend, Indiana, and an FBI field office in Salt Lake City, Utah

 

Awarded the lease for the development of a Food and Drug Administration (FDA) laboratory in Lenexa, Kansas which, upon completion, will be leased to the General Services Administration (GSA) for a 20-year term

 

Issued approximately 4.945 million shares of common stock for approximately $92.7 million of gross proceeds in the Company’s second public offering since its IPO

 

Issued 1.570 million shares of common stock for approximately $33.6 million of gross proceeds through the Company’s At-the-Market (ATM) Program

 

Completed a $175.0 million private placement of senior unsecured notes, comprised of three tranches: $95.0 million 4.05% senior notes (“Series A”) due May 25, 2027; $50.0 million 4.15% senior notes


 

 

 

 

 

(“Series B”) due May 25, 2029; and $30.0 million 4.30% senior notes (“Series C”) due May 25, 2032, with a weighted average maturity of 11.4 years and a weighted average interest rate of 4.12%

 

Completed a $127.5 million, 10-year, non-amortizing mortgage loan with a fixed interest rate of 3.59% per annum. The loan is secured by the 327,614-square foot VA - Loma Linda ambulatory care center  

 

Leverage at year end of 33.4% on the basis of net debt to total enterprise value

 

“We are pleased with the growth in our business in 2017.  We meaningfully expanded both our acquisition strategy and development efforts to achieve earnings growth and scale,” said William C. Trimble, III, Easterly’s Chief Executive Officer. “Since its inception, Easterly has grown the portfolio to its current size of 3.7 million square feet of real estate in 46 operating properties.  We have also launched three development projects which we believe will generate significant earnings growth in future years. We are pleased with our position and prospects.”

 

Financial Results for the Quarter Ended December 31, 2017

Net income of $1.5 million, or $0.03 per share on a fully diluted basis

FFO of $16.6 million, or $0.32 per share on a fully diluted basis

FFO, as Adjusted of $14.3 million, or $0.27 per share on a fully diluted basis

CAD of $12.1 million

 

Financial Results for the Year Ended December 31, 2017

Net income of $5.4 million, or $0.11 per share on a fully diluted basis

FFO of $60.6 million, or $1.26 per share on a fully diluted basis

FFO, as Adjusted of $54.8 million, or $1.14 per share on a fully diluted basis

CAD of $45.8 million

 

“Easterly continues to build its definable edge in the U.S. Government property space,” said Darrell Crate, Easterly’s Chairman. “The acquisition pipeline is strong and we continue to pursue development opportunities where we can add value to the agencies we serve as well as our shareholders.  Our origination, servicing, and financial capacity are well positioned for growth in 2018.”

 

Portfolio Operations

As of December 31, 2017, the Company wholly owned 46 operating properties in the United States, encompassing approximately 3.7 million square feet in the aggregate, including 44 operating properties that were leased primarily to U.S. Government tenant agencies and two operating properties that were entirely leased to private tenants. As of December 31, 2017, the portfolio had an average age of 12.1 years, was 100% occupied, and had a weighted average remaining lease term of 7.0 years.  With approximately 18.0% of leases


 

 

 

 

based on square footage, or 18.7% based on total annualized lease income scheduled to expire before 2020, Easterly expects to continue to provide a highly visible and stable cash-flow stream.

Acquisitions

In 2017, the Company acquired four properties with an aggregate purchase price of approximately $385 million.  

On February 3, 2017, Easterly acquired an OSHA laboratory in Sandy, Utah.  The 75,000-square foot building is a state-of-the-art forensics laboratory for testing of materials and products that have contributed to worker deaths or injuries nationwide. The build-to-suit facility was completed in 2003 and is fully leased to the GSA with six years remaining on an initial 20-year lease. The lease includes two five-year renewal options with fixed rental increases that, if exercised, would carry the lease term to 2034.

On June 1, 2017, Easterly acquired a VA outpatient clinic in Loma Linda, California. The 327,614-square foot property is one of the premier assets in the VA health system and provides a comprehensive solution for the outpatient needs of U.S. Veterans in the surrounding region. The LEED Silver build-to-suit construction, completed in 2016, is 100% leased to the VA through May 2036 for a total initial, non-cancelable lease term of 20 years.

On September 28, 2017, Easterly acquired a 169,542-square foot FBI field office in Salt Lake City, Utah.  The Class A, LEED Gold certified facility is located on a 7.5-acre campus and houses the FBI’s division that oversees federal operations in all of Utah, Idaho and Montana. The build-to-suit facility was constructed in 2012 and has a number of security upgrades, including perimeter fencing, a restricted visitor screening facility, and vehicle blockades. The facility is fully leased to the GSA until 2032 for a total initial, non-cancelable lease term of 20 years.

On November 16, 2017, Easterly acquired an 86,363-square foot VA outpatient clinic just outside of South Bend, Indiana. This building provides comprehensive outpatient services to U.S. Veterans residing in the surrounding region. The build-to-suit property was constructed in 2017 and is 100% leased to the VA through 2032 for an initial, non-cancelable lease term of 15 years.  

 

Dispositions

On December 28, 2017, Easterly sold the 81,721-square foot warehouse / distribution facility privately leased to Parbel of Florida, located in Miramar, Florida, for net proceeds of $10.5 million.  With the sale of this facility, Easterly now generates 98.7% of its annualized lease income from the U.S. Government and maintains 100% occupancy.

 

Development

On April 27, 2017, Easterly was awarded the lease for an estimated 53,120-square foot FDA laboratory in Lenexa, Kansas (“FDA – Lenexa”). The FDA currently operates 13 field laboratories, located strategically throughout the country. FDA - Lenexa will become the newest laboratory in the FDA’s portfolio and, upon completion, will be leased to the GSA for a 20-year term.

On October 4, 2017, Easterly purchased the re-development rights to a 210,373-square foot FEMA distribution center in Tracy, California. FEMA - Tracy, one of the eight regional distributions centers located strategically throughout the country, is currently under re-development with an anticipated delivery date in the fourth quarter


 

 

 

 

of 2018. Easterly has assumed all re-development activities and, upon occupancy, will commence a 20-year non-cancelable lease with the GSA on this mission critical facility.

Balance Sheet

As of December 31, 2017, the Company had total indebtedness of $579.7 million comprised of $99.8 million outstanding on its senior unsecured revolving credit facility, $100.0 million outstanding on its senior unsecured term loan facility, $175.0 million of senior unsecured notes, and $204.9 million of mortgage debt (excluding unamortized premiums and discounts and deferred financing fees). At December 31, 2017, Easterly’s outstanding debt had a weighted average maturity of 7.8 years and a weighted average interest rate of 3.6%. As of December 31, 2017, Easterly’s net debt to total enterprise value was 33.4% and its net debt to annualized quarterly EBITDA ratio was 6.4x, pro forma for a full quarter of operations from VA - South Bend.

On September 11, 2017 the Company physically settled the forward equity sales agreements entered into on March 27, 2017 by issuing 4.945 million shares of the Company’s common stock in exchange for approximately $92.7 million in gross proceeds. The forward equity sales agreements were entered into in conjunction with the closing of an underwritten offering on a forward basis and the announcement of the VA - Loma Linda and VA - South Bend acquisitions.

During the twelve months ended December 31, 2017, the Company issued 1,569,514 shares of the Company’s common stock at an average price of $21.41 per share through the Company’s ATM program, raising gross proceeds of $33.6 million to maintain balance sheet strength.  

 

Dividend

On February 21, 2018 the Board of Directors of Easterly approved a cash dividend for the fourth quarter of 2017 in the amount of $0.26 per common share. The dividend will be payable March 28, 2018 to shareholders of record on March 13, 2018.  

 

Outlook for 2018

The Company’s financial guidance for the 12 months ending December 31, 2018 is as follows:  

Outlook for the 12 Months Ending December 31, 2018

 

 

  

Low

 

  

High

 

Net income (loss) per share – fully diluted basis

  

$

0.23

 

 

 

0.27

  

Plus: real estate depreciation and amortization

  

$

1.08

 

 

 

1.08

  

FFO per share – fully diluted basis

  

$

1.31

 

 

 

1.35

  

 

This guidance assumes $350 million of acquisitions and $75 - $100 million of development-related investment during 2018. 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.

 

 


 

 

 

 

 

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. Additional detail can be found in 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.

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 and nonrecurring expenditures. 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.

EBITDA is calculated as the sum of net income (loss) before interest expense, income taxes, depreciation and amortization. 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 and is not indicative of operating income or cash provided by operating activities as determined under GAAP. 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 by NAREIT as net income (loss), calculated in accordance with GAAP, excluding gains or losses from sales of property and impairment losses on depreciable real estate, plus real estate depreciation and amortization, and after adjustments for unconsolidated partnerships and joint ventures. 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.

Funds From Operations, as Adjusted (FFO, as Adjusted) adjusts FFO to present an alternative measure of our operating performance, which, when applicable, excludes the impact of acquisition costs, straight-line rent, above-/below-market leases, non-cash interest expense and non-cash compensation. By excluding income and expense items such as straight-line rent, above-/below-market leases, non-cash interest expense, non-cash compensation and other non-cash items including amortization of lease inducements from FFO, as Adjusted, the Company believes it provides useful information as these items have no cash impact. In addition, by excluding acquisition related costs the Company believes FFO, as Adjusted provides useful information that is comparable across periods and more accurately reflects the operating performance of the Company’s properties.

 

 

 


 

 

 

 

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 units, 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. Fully diluted basis does not include outstanding LTIP units in the Company’s operating partnership that are subject to performance criteria that have not yet been met.

 

Conference Call Information

The Company will host a webcast and conference call at 10:00 a.m. Eastern Standard time on March 1, 2018 to review the fourth quarter and full year 2017 performance, discuss recent events and conduct a question-and-answer session. The number to call is 1-877-705-6003 (domestic) and 1-201-493-6725 (international). A live webcast will be available in the Investor Relations section of the Company’s website.  A replay of the conference call will be available through March 15, 2018 by dialing 844-512-2921 (domestic) and 412-317-6671 (international) and entering the passcode 13676248.  Please note that the full text of the press release and supplemental information package are 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 primarily 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

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 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 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; risks associated with ownership and development of real estate; decreased rental rates or increased vacancy rates; 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 to yield anticipated results; 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; and other risks and uncertainties detailed in the “Risk Factors” section of our Form 10-K for the year ended December 31, 2017, to be filed with the Securities and Exchange Commission on or about March 1, 2018.  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.


 

 

 

 

Balance Sheet

(Unaudited, in thousands, except share amounts)

 

 

 

 

 

 

 

 

 

 

 

 

December 31, 2017

 

 

December 31, 2016(1)

 

Assets

 

 

 

 

 

 

 

 

Real estate properties, net

 

$

1,230,162

 

 

$

901,422

 

Cash and cash equivalents

 

 

12,682

 

 

 

4,845

 

Restricted cash

 

 

3,519

 

 

 

1,646

 

Deposits on acquisitions

 

 

750

 

 

 

1,750

 

Rents receivable

 

 

12,751

 

 

 

8,544

 

Accounts receivable

 

 

9,347

 

 

 

5,823

 

Deferred financing, net

 

 

945

 

 

 

2,787

 

Intangible assets, net

 

 

143,063

 

 

 

114,873

 

Interest rate swaps

 

 

4,031

 

 

 

3,785

 

Prepaid expenses and other assets

 

 

8,088

 

 

 

1,422

 

Total assets

 

$

1,425,338

 

 

$

1,046,897

 

 

 

 

 

 

 

 

 

 

Liabilities

 

 

 

 

 

 

 

 

Revolving credit facility

 

 

99,750

 

 

 

212,167

 

Term loan facility, net

 

 

99,202

 

 

 

-

 

Notes payable, net

 

 

173,692

 

 

 

-

 

Mortgage notes payable, net

 

 

203,250

 

 

 

80,806

 

Intangible liabilities, net

 

 

38,569

 

 

 

41,840

 

Accounts payable and accrued liabilities

 

 

19,786

 

 

 

13,784

 

Total liabilities

 

 

634,249

 

 

 

348,597

 

 

 

 

 

 

 

 

 

 

Equity

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

 

44,787,040 and 36,874,810 shares issued and outstanding at December 31, 2017 and December 31, 2016, respectively.

 

 

448

 

 

 

369

 

Additional paid-in capital

 

 

740,546

 

 

 

597,164

 

Retained earnings

 

 

7,127

 

 

 

2,679

 

Cumulative dividends

 

 

(83,718

)

 

 

(42,794

)

Accumulated other comprehensive income

 

 

3,403

 

 

 

3,038

 

Total stockholders' equity

 

 

667,806

 

 

 

560,456

 

Non-controlling interest in Operating Partnership

 

 

123,283

 

 

 

137,844

 

Total equity

 

 

791,089

 

 

 

698,300

 

Total liabilities and equity

 

$

1,425,338

 

 

$

1,046,897

 

 

 

In the fourth quarter of 2017, the Company revised the prior period real estate properties, net and intangible assets, net amounts. Refer to the Company's Annual Report on Form 10-K for the year ended December 31, 2017, for a detailed discussion of the revision.


 

 

 

 

Income Statement

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

 

Year Ended

 

 

 

 

December 31, 2017

 

 

December 31, 2016(1)

 

 

December 31, 2017

 

 

December 31, 2016(1)

 

 

Revenues

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Rental income

 

$

32,402

 

 

$

24,844

 

 

$

116,002

 

 

$

93,364

 

 

Tenant reimbursements

 

 

3,773

 

 

 

3,631

 

 

 

13,929

 

 

 

10,647

 

 

Other income

 

 

150

 

 

 

276

 

 

 

742

 

 

 

607

 

 

Total revenues

 

 

36,325

 

 

 

28,751

 

 

 

130,673

 

 

 

104,618

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Property operating

 

 

6,003

 

 

 

6,352

 

 

 

24,907

 

 

 

21,078

 

 

Real estate taxes

 

 

4,564

 

 

 

2,663

 

 

 

13,730

 

 

 

9,896

 

 

Depreciation and amortization

 

 

14,782

 

 

 

12,278

 

 

 

54,873

 

 

 

45,883

 

 

Acquisition costs

 

 

299

 

 

 

459

 

 

 

1,493

 

 

 

1,798

 

 

Corporate general and administrative

 

 

3,394

 

 

 

3,135

 

 

 

12,900

 

 

 

12,289

 

 

Total expenses

 

 

29,042

 

 

 

24,887

 

 

 

107,903

 

 

 

90,944

 

 

Operating income

 

 

7,283

 

 

 

3,864

 

 

 

22,770

 

 

 

13,674

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense, net

 

 

(5,445

)

 

 

(2,210

)

 

 

(17,071

)

 

 

(8,177

)

 

Loss on the sale of operating property

 

 

(310

)

 

 

-

 

 

 

(310

)

 

 

-

 

 

Net income

 

 

1,528

 

 

 

1,654

 

 

 

5,389

 

 

 

5,497

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-controlling interest in Operating Partnership

 

 

(241

)

 

 

(354

)

 

 

(941

)

 

 

(1,534

)

 

Net income available to Easterly Government

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Properties, Inc.

 

$

1,287

 

 

$

1,300

 

 

$

4,448

 

 

$

3,963

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income available to Easterly Government

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Properties, Inc. per share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

0.03

 

 

$

0.04

 

 

$

0.11

 

 

$

0.13

 

 

Diluted

 

$

0.03

 

 

$

0.03

 

 

$

0.10

 

 

$

0.12

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted-average common shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

44,085,339

 

 

 

35,864,168

 

 

 

39,607,740

 

 

 

30,645,279

 

 

Diluted

 

 

46,089,594

 

 

 

37,628,572

 

 

 

41,563,540

 

 

 

32,372,538

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income, per share - fully diluted basis

 

$

0.03

 

 

$

0.04

 

 

$

0.11

 

 

$

0.13

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average common shares outstanding -

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

fully diluted basis

 

 

52,362,459

 

 

 

44,968,730

 

 

 

48,009,544

 

 

 

42,539,017

 

 

 

In the fourth quarter of 2017, the Company revised the prior period depreciation and amortization expense amount. Refer to the Company's Annual Report on Form 10-K for the year ended December 31, 2017, for a detailed discussion of the revision.


 

 

 

 

EBITDA, FFO and CAD

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

 

Year Ended

 

 

 

 

December 31, 2017

 

 

December 31, 2016(1)

 

 

December 31, 2017

 

 

December 31, 2016(1)

 

 

Net income

 

$

1,528

 

 

$

1,654

 

 

$

5,389

 

 

$

5,497

 

 

Depreciation and amortization

 

 

14,782

 

 

 

12,278

 

 

 

54,873

 

 

 

45,883

 

 

Interest expense

 

 

5,445

 

 

 

2,210

 

 

 

17,071

 

 

 

8,177

 

 

EBITDA

 

$

21,755

 

 

$

16,142

 

 

$

77,333

 

 

$

59,557

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income

 

$

1,528

 

 

$

1,654

 

 

$

5,389

 

 

$

5,497

 

 

Depreciation and amortization

 

 

14,782

 

 

 

12,278

 

 

 

54,873

 

 

 

45,883

 

 

Loss on the sale of operating property

 

 

310

 

 

 

-

 

 

 

310

 

 

 

-

 

 

Funds From Operations (FFO)

 

$

16,620

 

 

$

13,932

 

 

$

60,572

 

 

$

51,380

 

 

Adjustments to FFO:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Acquisition costs

 

 

299

 

 

 

459

 

 

 

1,493

 

 

 

1,798

 

 

Straight-line rent and other non-cash adjustments

 

 

(1,402

)

 

 

(91

)

 

 

(2,778

)

 

 

(108

)

 

Above-/below-market leases

 

 

(2,234

)

 

 

(1,928

)

 

 

(8,517

)

 

 

(7,153

)

 

Non-cash interest expense

 

 

312

 

 

 

229

 

 

 

1,096

 

 

 

814

 

 

Non-cash compensation

 

 

748

 

 

 

741

 

 

 

2,963

 

 

 

2,905

 

 

Funds From Operations, as Adjusted

 

$

14,343

 

 

$

13,342

 

 

$

54,829

 

 

$

49,636

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

FFO, per share - fully diluted basis

 

$

0.32

 

 

$

0.31

 

 

$

1.26

 

 

$

1.21

 

 

FFO, as Adjusted, per share -  fully diluted basis

 

$

0.27

 

 

$

0.30

 

 

$

1.14

 

 

$

1.17

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Funds From Operations, as Adjusted

 

$

14,343

 

 

$

13,342

 

 

$

54,829

 

 

$

49,636

 

 

Acquisition costs

 

 

(299

)

 

 

(459

)

 

 

(1,493

)

 

 

(1,798

)

 

Principal amortization

 

 

(756

)

 

 

(726

)

 

 

(2,977

)

 

 

(2,857

)

 

Maintenance capital expenditures

 

 

(773

)

 

 

(369

)

 

 

(3,450

)

 

 

(1,150

)

 

Contractual tenant improvements

 

 

(355

)

 

 

(107

)

 

 

(690

)

 

 

(138

)

 

Leasing related expenditures

 

 

(83

)

 

 

-

 

 

 

(422

)

 

 

-

 

 

Cash Available for Distribution (CAD)

 

$

12,077

 

 

$

11,681

 

 

$

45,797

 

 

$

43,693

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average common shares outstanding -

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

fully diluted basis

 

 

52,362,459

 

 

 

44,968,730

 

 

 

48,009,544

 

 

 

42,539,017

 

 

 

In the fourth quarter of 2017, the Company revised the prior period depreciation and amortization expense amount. Refer to the Company's Annual Report on Form 10-K for the year ended December 31, 2017, for a detailed discussion of the revision.

dea-ex992_6.htm

Exhibit 99.2

 


Disclaimers

 

 

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; risks associated with ownership and development of real estate; decreased rental rates or increased vacancy rates; 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 to yield anticipated results; 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; and other risks and uncertainties detailed in the “Risk Factors” section of our Form 10-K for the year ended December 31, 2017, to be filed with the Securities and Exchange Commission on or about March 1, 2018 and the factors 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 year ended December 31, 2017 that will be released on Form 10-K to be filed on or about March 1, 2018.

 

 

2


Supplemental Definitions

 

 

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.

 

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 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 and nonrecurring expenditures. 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.

EBITDA is calculated as the sum of net income (loss) before interest expense, income taxes, depreciation and amortization. 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 and is not indicative of operating income or cash provided by operating activities as determined under GAAP. 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. Fully diluted basis does not include outstanding LTIP units in the Company’s operating partnership that are subject to performance criteria that have not yet been met.

Funds From Operations (FFO) is defined by NAREIT as net income (loss), calculated in accordance with GAAP, excluding gains or losses from sales of property and impairment losses on depreciable real estate, plus real estate depreciation and amortization, and after adjustments for unconsolidated partnerships and joint ventures. 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.

Funds From Operations, as Adjusted (FFO, as Adjusted) adjusts FFO to present an alternative measure of our operating performance, which, when applicable, excludes the impact of acquisition costs, straight-line rent, above-/below-market leases, non-cash interest expense and non-cash compensation. By excluding income and expense items such as straight-line rent, above-/below-market leases, non-cash interest expense, non-cash compensation and other non-cash items including amortization of lease inducements from FFO, as Adjusted, the Company believes it provides useful information as these items have no cash impact. In addition, by excluding acquisition related costs the Company believes FFO, as Adjusted provides useful information that is comparable across periods and more accurately reflects the operating performance of the Company’s properties.

 

 

3


Supplemental Definitions

 

 

Net Operating Income (NOI) is calculated as net income plus depreciation and amortization, acquisition costs, corporate general and administrative costs and interest expense. Cash NOI excludes from NOI straight-line rent and amortization of above-/below market leases. 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 our properties. NOI and Cash NOI should not be considered an alternative to net income as an indication of our performance or to cash flows as a measure of the Company's liquidity or its ability to make distributions.

 

4


Table of Contents

 

 

 

Overview

 

 

 

 

 

Corporate Information and Analyst Coverage

 

6

 

 

 

Executive Summary

 

7

 

 

 

Corporate Financials

 

 

 

 

 

Balance Sheets

 

8

 

 

 

Income Statements

 

9

 

 

 

Net Operating Income

 

10

 

 

 

EBITDA, FFO and CAD

 

11

 

 

 

Debt

 

 

 

 

 

Debt Schedules

 

12

 

 

 

Debt Maturities

 

13

 

 

 

Properties

 

 

 

 

 

Operating Property Overview

 

14

 

 

 

Tenants

 

16

 

 

 

Lease Expirations

 

17


 

 

 

 

 

 

`5


Corporate Information and Analyst Coverage

 

 

 

Corporate Information

 

 

 

 

Corporate Headquarters

Stock Exchange Listing

Information Requests

Investor Relations

2101 L Street NW

New York Stock Exchange

Please contact ir@easterlyreit.com

Lindsay Winterhalter,

Suite 650

 

or 202-596-3947 to request an

VP, Investor Relations

Washington, DC 20037

Ticker

Investor Relations package

& Operations

202-595-9500

DEA

 

 

 

Executive Team

 

Board of Directors

 

William Trimble III, CEO

Darrell Crate, Chairman

William Binnie

Michael Ibe

Michael Ibe, Vice-Chairman and EVP

Meghan Baivier, CFO & COO

Darrell Crate

James Mead

Alison Bernard, CAO

Ronald Kendall, EVP

Cynthia Fisher

William Trimble III

 

 

Emil Henry Jr.

 

 

Equity Research Coverage

 

 

 

 

 

Citigroup

Raymond James & Associates

RBC Capital Markets

Michael Bilerman / Emmanuel Korchman

Bill Crow / Paul Puryear

Michael Carroll

212-816-1383 / 212-816-1382

727-567-2594 / 727-567-2253

440-715-2649

 

 

 

Jefferies

SunTrust Robinson Humphrey

 

Jonathan Petersen

Michael R. Lewis

 

212-284-1705

212-319-5659

 

 

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 amounts)

 

 

Price of Common Shares

 

Three months ended December 31, 2017

 

 

Earnings

 

Three months ended December 31, 2017

 

 

Three months ended December 31, 2016(4)

 

High closing price during period

 

$

22.09

 

 

Net income available to Easterly Government Properties, Inc.

 

$

1,287

 

 

$

1,300

 

Low closing price during period

 

$

19.82

 

 

Net income available to Easterly Government Properties, Inc.

 

 

 

 

 

 

 

 

End of period closing price

 

$

21.34

 

 

per share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

0.03

 

 

$

0.04

 

Outstanding Classes of Stock and

 

 

 

 

 

Diluted

 

$

0.03

 

 

$

0.03

 

Partnership Units - Fully Diluted Basis

 

At December 31, 2017

 

 

 

 

 

 

 

 

 

 

 

Common shares

 

 

44,769,128

 

 

Net income

 

$

1,528

 

 

$

1,654

 

Unvested restricted shares

 

 

17,912

 

 

Net income, per share - fully diluted basis

 

$

0.03

 

 

$

0.04

 

Common partnership units outstanding

 

 

8,268,084

 

 

 

 

 

 

 

 

 

 

 

Total - fully diluted basis

 

 

53,055,124

 

 

Funds From Operations ("FFO")

 

$

16,620

 

 

$

13,932

 

 

 

 

 

 

 

FFO, per share - fully diluted basis

 

$

0.32

 

 

$

0.31

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Market Capitalization

 

At December 31, 2017

 

 

Funds From Operations, as Adjusted

 

$

14,343

 

 

$

13,342

 

Total equity market capitalization - fully diluted basis

 

$

1,132,196

 

 

FFO, as Adjusted, per share - fully diluted basis

 

$

0.27

 

 

$

0.30

 

Consolidated debt(1)

 

 

579,655

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

 

(12,682

)

 

Cash Available for Distribution

 

$

12,077

 

 

$

11,681

 

Total enterprise value

 

$

1,699,169

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Liquidity

 

 

 

 

 

At December 31, 2017

 

Ratios

 

At December 31, 2017

 

 

Cash and cash equivalents

 

 

 

 

 

$

12,682

 

Net debt to total enterprise value

 

 

33.4

%

 

 

 

 

 

 

 

 

 

 

Net debt to annualized quarterly EBITDA

 

 

6.5

x

 

Unsecured revolving credit facility

 

 

 

 

 

 

 

 

Cash interest coverage ratio

 

 

4.2

x

 

Total current facility size (2)

 

 

 

 

 

$

400,000

 

Cash fixed charge coverage ratio

 

 

3.7

x

 

Less: outstanding balance

 

 

 

 

 

 

(99,750

)

Pro forma net debt to annualized quarterly EBITDA(3)

 

 

6.4

x

 

Available under unsecured revolving credit facility

 

 

 

 

 

$

300,250

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

(2)Credit facility has an accordion feature that provides additional capacity, subject to the satisfaction of customary terms and conditions, of up to $250 million, for a total facility size of not more than $650  million.

(3)Pro-forma assuming a full quarter of operations from VA - South Bend.

(4)In the fourth quarter of 2017, the Company revised the prior period depreciation and amortization expense amount. Refer to the Company's Annual Report on Form 10-K for the year ended December 31, 2017, for a detailed discussion of the revision.  

`7


Balance Sheets

(Unaudited, in thousands, except share amounts)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

December 31, 2017

 

 

December 31, 2016(1)

 

Assets

 

 

 

 

 

 

 

 

Real estate properties, net

 

$

1,230,162

 

 

$

901,422

 

Cash and cash equivalents

 

 

12,682

 

 

 

4,845

 

Restricted cash

 

 

3,519

 

 

 

1,646

 

Deposits on acquisitions

 

 

750

 

 

 

1,750

 

Rents receivable

 

 

12,751

 

 

 

8,544

 

Accounts receivable

 

 

9,347

 

 

 

5,823

 

Deferred financing, net

 

 

945

 

 

 

2,787

 

Intangible assets, net

 

 

143,063

 

 

 

114,873

 

Interest rate swaps

 

 

4,031

 

 

 

3,785

 

Prepaid expenses and other assets

 

 

8,088

 

 

 

1,422

 

Total assets

 

$

1,425,338

 

 

$

1,046,897

 

 

 

 

 

 

 

 

 

 

Liabilities

 

 

 

 

 

 

 

 

Revolving credit facility

 

 

99,750

 

 

 

212,167

 

Term loan facility, net

 

 

99,202

 

 

 

-

 

Notes payable, net

 

 

173,692

 

 

 

-

 

Mortgage notes payable, net

 

 

203,250

 

 

 

80,806

 

Intangible liabilities, net

 

 

38,569

 

 

 

41,840

 

Accounts payable and accrued liabilities

 

 

19,786

 

 

 

13,784

 

Total liabilities

 

 

634,249

 

 

 

348,597

 

 

 

 

 

 

 

 

 

 

Equity

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

 

44,787,040 and 36,874,810 shares issued and outstanding at December 31, 2017 and December 31, 2016, respectively.

 

 

448

 

 

 

369

 

Additional paid-in capital

 

 

740,546

 

 

 

597,164

 

Retained earnings

 

 

7,127

 

 

 

2,679

 

Cumulative dividends

 

 

(83,718

)

 

 

(42,794

)

Accumulated other comprehensive income

 

 

3,403

 

 

 

3,038

 

Total stockholders' equity

 

 

667,806

 

 

 

560,456

 

Non-controlling interest in Operating Partnership

 

 

123,283

 

 

 

137,844

 

Total equity

 

 

791,089

 

 

 

698,300

 

Total liabilities and equity

 

$

1,425,338

 

 

$

1,046,897

 

 

(1)In the fourth quarter of 2017, the Company revised the prior period real estate properties, net and intangible assets, net amounts. Refer to the Company's Annual Report on Form 10-K for the year ended December 31, 2017, for a detailed discussion of the revision.  

`8


Income Statements

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

 

Year Ended

 

 

 

 

December 31, 2017

 

 

December 31, 2016(1)

 

 

December 31, 2017

 

 

December 31, 2016(1)

 

 

Revenues

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Rental income

 

$

32,402

 

 

$

24,844

 

 

$

116,002

 

 

$

93,364

 

 

Tenant reimbursements

 

 

3,773

 

 

 

3,631

 

 

 

13,929

 

 

 

10,647

 

 

Other income

 

 

150

 

 

 

276

 

 

 

742

 

 

 

607

 

 

Total revenues

 

 

36,325

 

 

 

28,751

 

 

 

130,673

 

 

 

104,618

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Property operating

 

 

6,003

 

 

 

6,352

 

 

 

24,907

 

 

 

21,078

 

 

Real estate taxes

 

 

4,564

 

 

 

2,663

 

 

 

13,730

 

 

 

9,896

 

 

Depreciation and amortization

 

 

14,782

 

 

 

12,278

 

 

 

54,873

 

 

 

45,883

 

 

Acquisition costs

 

 

299

 

 

 

459

 

 

 

1,493

 

 

 

1,798

 

 

Corporate general and administrative

 

 

3,394

 

 

 

3,135

 

 

 

12,900

 

 

 

12,289

 

 

Total expenses

 

 

29,042

 

 

 

24,887

 

 

 

107,903

 

 

 

90,944

 

 

Operating income

 

 

7,283

 

 

 

3,864

 

 

 

22,770

 

 

 

13,674

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense, net

 

 

(5,445

)

 

 

(2,210

)

 

 

(17,071

)

 

 

(8,177

)

 

Loss on the sale of operating property

 

 

(310

)

 

 

-

 

 

 

(310

)

 

 

-

 

 

Net income

 

 

1,528

 

 

 

1,654

 

 

 

5,389

 

 

 

5,497

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-controlling interest in Operating Partnership

 

 

(241

)

 

 

(354

)

 

 

(941

)

 

 

(1,534

)

 

Net income available to Easterly Government

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Properties, Inc.

 

$

1,287

 

 

$

1,300

 

 

$

4,448

 

 

$

3,963

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income available to Easterly Government

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Properties, Inc. per share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

0.03

 

 

$

0.04

 

 

$

0.11

 

 

$

0.13

 

 

Diluted

 

$

0.03

 

 

$

0.03

 

 

$

0.10

 

 

$

0.12

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted-average common shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

44,085,339

 

 

 

35,864,168

 

 

 

39,607,740

 

 

 

30,645,279

 

 

Diluted

 

 

46,089,594

 

 

 

37,628,572

 

 

 

41,563,540

 

 

 

32,372,538

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income, per share - fully diluted basis

 

$

0.03

 

 

$

0.04

 

 

$

0.11

 

 

$

0.13

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average common shares outstanding -

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

fully diluted basis

 

 

52,362,459

 

 

 

44,968,730

 

 

 

48,009,544

 

 

 

42,539,017

 

 

(1)In the fourth quarter of 2017, the Company revised the prior period depreciation and amortization expense amount. Refer to the Company's Annual Report on Form 10-K for the year ended December 31, 2017, for a detailed discussion of the revision.  

`9


Net Operating Income

(Unaudited, in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

 

Year Ended

 

 

 

 

December 31, 2017

 

 

December 31, 2016(1)

 

 

December 31, 2017

 

 

December 31, 2016(1)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income

 

$

1,528

 

 

$

1,654

 

 

$

5,389

 

 

$

5,497

 

 

Depreciation and amortization

 

 

14,782

 

 

 

12,278

 

 

 

54,873

 

 

 

45,883

 

 

Acquisition costs

 

 

299

 

 

 

459

 

 

 

1,493

 

 

 

1,798

 

 

Corporate general and administrative

 

 

3,394

 

 

 

3,135

 

 

 

12,900

 

 

 

12,289

 

 

Interest expense

 

 

5,445

 

 

 

2,210

 

 

 

17,071

 

 

 

8,177

 

 

Loss on the sale of operating property

 

 

310

 

 

 

-

 

 

 

310

 

 

 

-

 

 

Net Operating Income

 

 

25,758

 

 

 

19,736

 

 

 

92,036

 

 

 

73,644

 

 

Adjustments to Net Operating Income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Straight-line rent

 

 

(1,403

)

 

 

(110

)

 

 

(2,779

)

 

 

(265

)

 

Above-/below-market leases

 

 

(2,234

)

 

 

(1,928

)

 

 

(8,517

)

 

 

(7,153

)

 

Cash Net Operating Income

 

$

22,121

 

 

$

17,698

 

 

$

80,740

 

 

$

66,226

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1)In the fourth quarter of 2017, the Company revised the prior period depreciation and amortization expense amount. Refer to the Company's Annual Report on Form 10-K for the year ended December 31, 2017, for a detailed discussion of the revision.  

`10


EBITDA, FFO and CAD

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

 

Year Ended

 

 

 

 

December 31, 2017

 

 

December 31, 2016(1)

 

 

December 31, 2017

 

 

December 31, 2016(1)

 

 

Net income

 

$

1,528

 

 

$

1,654

 

 

$

5,389

 

 

$

5,497

 

 

Depreciation and amortization

 

 

14,782

 

 

 

12,278

 

 

 

54,873

 

 

 

45,883

 

 

Interest expense

 

 

5,445

 

 

 

2,210

 

 

 

17,071

 

 

 

8,177

 

 

EBITDA

 

$

21,755

 

 

$

16,142

 

 

$

77,333

 

 

$

59,557

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income

 

$

1,528

 

 

$

1,654

 

 

$

5,389

 

 

$

5,497

 

 

Depreciation and amortization

 

 

14,782

 

 

 

12,278

 

 

 

54,873

 

 

 

45,883

 

 

Loss on the sale of operating property

 

 

310

 

 

 

-

 

 

 

310

 

 

 

-

 

 

Funds From Operations (FFO)

 

$

16,620

 

 

$

13,932

 

 

$

60,572

 

 

$

51,380

 

 

Adjustments to FFO:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Acquisition costs

 

 

299

 

 

 

459

 

 

 

1,493

 

 

 

1,798

 

 

Straight-line rent and other non-cash adjustments

 

 

(1,402

)

 

 

(91

)

 

 

(2,778

)

 

 

(108

)

 

Above-/below-market leases

 

 

(2,234

)

 

 

(1,928

)

 

 

(8,517

)

 

 

(7,153

)

 

Non-cash interest expense

 

 

312

 

 

 

229

 

 

 

1,096

 

 

 

814

 

 

Non-cash compensation

 

 

748

 

 

 

741

 

 

 

2,963

 

 

 

2,905

 

 

Funds From Operations, as Adjusted

 

$

14,343

 

 

$

13,342

 

 

$

54,829

 

 

$

49,636

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

FFO, per share - fully diluted basis

 

$

0.32

 

 

$

0.31

 

 

$

1.26

 

 

$

1.21

 

 

FFO, as Adjusted, per share -  fully diluted basis

 

$

0.27

 

 

$

0.30

 

 

$

1.14

 

 

$

1.17

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Funds From Operations, as Adjusted

 

$

14,343

 

 

$

13,342

 

 

$

54,829

 

 

$

49,636

 

 

Acquisition costs

 

 

(299

)

 

 

(459

)

 

 

(1,493

)

 

 

(1,798

)

 

Principal amortization

 

 

(756

)

 

 

(726

)

 

 

(2,977

)

 

 

(2,857

)

 

Maintenance capital expenditures

 

 

(773

)

 

 

(369

)

 

 

(3,450

)

 

 

(1,150

)

 

Contractual tenant improvements

 

 

(355

)

 

 

(107

)

 

 

(690

)

 

 

(138

)

 

Leasing related expenditures

 

 

(83

)

 

 

-

 

 

 

(422

)

 

 

-

 

 

Cash Available for Distribution (CAD)

 

$

12,077

 

 

$

11,681

 

 

$

45,797

 

 

$

43,693

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average common shares outstanding -

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

fully diluted basis

 

 

52,362,459

 

 

 

44,968,730

 

 

 

48,009,544

 

 

 

42,539,017

 

 

(1)In the fourth quarter of 2017, the Company revised the prior period depreciation and amortization expense amount. Refer to the Company's Annual Report on Form 10-K for the year ended December 31, 2017, for a detailed discussion of the revision.  

`11


Debt Schedules

(Unaudited, in thousands)

 

 

Debt Instrument

Maturity Date

 

Stated Rate(1)

 

December 31, 2017

Balance(2)

 

December 31, 2017

Percent of

Total Indebtedness

 

Unsecured debt

 

 

 

 

 

 

 

 

 

 

 

 

Unsecured revolving credit facility(3)

11-Feb-19(4)

 

LIBOR + 150bps

 

$

99,750

 

17.2%

 

Unsecured term loan facility

29-Sep-23

 

3.17%(5)

 

 

100,000

 

17.3%

 

Notes payable - series A

25-May-27

 

4.05%

 

 

95,000

 

16.4%

 

Notes payable - series B

25-May-29

 

4.15%

 

 

50,000

 

8.6%

 

Notes payable - series C

25-May-32

 

4.30%

 

 

30,000

 

5.2%

 

 

6.9 years

 

3.57%

 

$

374,750

 

64.7%

 

Total unsecured debt

(wtd-avg maturity)

 

(wtd-avg rate)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Secured mortgage debt

 

 

 

 

 

 

 

 

 

 

 

 

VA - Loma Linda

6-Jul-27

 

3.59%

 

 

127,500

 

22.0%

 

ICE - Charleston

15-Jan-27

 

4.21%

 

 

19,804

 

3.3%

 

USFS II - Albuquerque

14-Jul-26

 

4.46%

 

 

16,893

 

2.9%

 

DEA - Pleasanton

18-Oct-23

 

LIBOR + 150bps

 

 

15,700

 

2.7%

 

CBP - Savannah

10-Jul-33

 

3.40%

 

 

14,212

 

2.5%

 

MEPCOM - Jacksonville

14-Oct-25

 

4.41%

 

 

10,796

 

1.9%

 

 

9.4 years

 

3.70%

 

$

204,905

 

35.3%

 

Total secured mortgage debt

(wtd-avg maturity)

 

(wtd-avg rate)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Debt Statistics

December 31, 2017

 

 

 

 

 

 

 

 

 

 

Variable rate debt - unhedged

$

115,450

 

 

 

 

 

 

 

 

 

 

Fixed rate debt

 

464,205

 

 

 

 

 

 

 

 

 

 

Total debt(2)

$

579,655

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

% Variable rate debt - unhedged

 

19.9

%

 

 

 

 

 

 

 

 

 

% Fixed rate debt

 

80.1

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average maturity

7.8 years

 

 

 

 

 

 

 

 

 

 

Weighted average interest rate

 

3.6

%

 

 

 

 

 

 

 

 

 

 

(1)Average stated rates represent the weighted average interest rate at December 31, 2017.

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

(3)Credit facility has available capacity of $300,250 as of December 31, 2017.

(4)Credit facility has two six-month as-of-right extension options subject to certain conditions and the payment of an extension fee.

(5)Entered into two interest rate swaps with an effective date of March 29, 2017 with an aggregate notional value of $100 million to effectively fix the interest rate at 3.17% annually based on the Company’s current leverage ratio.

`12


Debt Maturities

(Unaudited, in thousands)

 

 

 

 

Secured Debt

 

 

Unsecured Debt

 

 

 

 

 

 

 

 

 

 

Weighted Average

 

Year

 

Scheduled

Amortization

 

 

Scheduled

Maturities

 

 

Scheduled

Maturities

 

 

Total

 

 

Percentage of

Debt Maturing

 

 

Interest Rate of

Scheduled Maturities

 

2018

 

 

3,100

 

 

-

 

 

-

 

 

 

3,100

 

 

 

0.5

%

 

-

 

2019

 

 

3,229

 

 

-

 

 

 

99,750

 

 

 

102,979

 

 

 

17.8

%

 

 

3.02

%

2020

 

 

3,395

 

 

-

 

 

-

 

 

 

3,395

 

 

 

0.6

%

 

-

 

2021

 

 

4,054

 

 

-

 

 

-

 

 

 

4,054

 

 

 

0.7

%

 

-

 

2022

 

 

5,109

 

 

-

 

 

-

 

 

 

5,109

 

 

 

0.9

%

 

-

 

2023

 

 

5,388

 

 

 

15,700

 

 

 

100,000

 

 

 

121,088

 

 

 

20.9

%

 

 

3.13

%

2024

 

 

5,679

 

 

-

 

 

-

 

 

 

5,679

 

 

 

1.0

%

 

-

 

2025

 

 

5,633

 

 

 

1,917

 

 

-

 

 

 

7,550

 

 

 

1.3

%

 

 

4.41

%

2026

 

 

3,686

 

 

 

6,368

 

 

-

 

 

 

10,054

 

 

 

1.7

%

 

 

4.46

%

2027

 

 

1,093

 

 

 

134,640

 

 

 

95,000

 

 

 

230,733

 

 

 

39.8

%

 

 

3.82

%

2028

 

 

983

 

 

-

 

 

-

 

 

 

983

 

 

 

0.2

%

 

-

 

2029

 

 

1,016

 

 

-

 

 

 

50,000

 

 

 

51,016

 

 

 

8.8

%

 

 

4.15

%

2030

 

 

1,049

 

 

-

 

 

-

 

 

 

1,049

 

 

 

0.2

%

 

-

 

2031

 

 

1,082

 

 

-

 

 

-

 

 

 

1,082

 

 

 

0.2

%

 

-

 

2032

 

 

1,116

 

 

-

 

 

 

30,000

 

 

 

31,116

 

 

 

5.3

%

 

 

4.30

%

2033

 

 

668

 

 

-

 

 

-

 

 

 

668

 

 

 

0.1

%

 

-

 

Total

$

 

46,280

 

$

 

158,625

 

$

 

374,750

 

$

 

579,655

 

 

 

100.0

%

 

 

 

 

 

 

13


Operating Property Overview

(As of December 31, 2017, unaudited)

 

 

 

Property Name

 

Location

 

Property Type

 

Tenant

Lease

Expiration

Year

 

Year Built /

Renovated

 

Rentable

Square

Feet

 

 

Annualized

Lease

Income

 

 

Percentage

of Total

Annualized

Lease

Income

 

 

Annualized

Lease

Income per

Leased

Square Foot

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S. Government Leased Properties

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

VA - Loma Linda

 

Loma Linda, CA

 

Outpatient Clinic

 

2036

 

2016

 

 

327,614

 

 

$

16,041,032

 

 

 

12.2

%

 

$

48.96

 

IRS - Fresno

 

Fresno, CA

 

Office

 

2018

 

2003

 

 

180,481

 

 

 

7,476,056

 

 

 

5.7

%

 

 

41.42

 

FBI - Salt Lake

 

Salt Lake City, UT

 

Office

 

2032

 

2012

 

 

169,542

 

 

 

6,746,595

 

 

 

5.1

%

 

 

39.79

 

PTO - Arlington

 

Arlington, VA

 

Office

 

2019 / 2020

 

2009

 

 

189,871

 

 

 

6,527,123

 

 

 

5.0

%

 

 

34.38

 

FBI - San Antonio

 

San Antonio, TX

 

Office

 

2021

 

2007

 

 

148,584

 

 

 

5,132,896

 

 

 

3.9

%

 

 

34.55

 

FBI - Omaha

 

Omaha, NE

 

Office

 

2024

 

2009

 

 

112,196

 

 

 

4,613,840

 

 

 

3.5

%

 

 

41.12

 

EPA - Kansas City

 

Kansas City, KS

 

Laboratory

 

2023

 

2003

 

 

71,979

 

 

 

4,171,384

 

 

 

3.2

%

 

 

57.95

 

VA - South Bend

 

Mishawaka, IN

 

Outpatient Clinic

 

2032

 

2017

 

 

86,363

 

 

 

3,964,091

 

 

 

3.0

%

 

 

45.90

 

ICE - Charleston

 

North Charleston, SC

 

Office

 

2021 / 2027

 

1994 / 2012

 

 

86,733

 

 

 

3,770,148

 

 

 

2.9

%

 

 

43.47

 

DOT - Lakewood

 

Lakewood, CO

 

Office

 

2024

 

2004

 

 

122,225

 

 

 

3,492,465

 

 

 

2.7

%

 

 

28.57

 

USCIS - Lincoln

 

Lincoln, NE

 

Office

 

2020

 

2005

 

 

137,671

 

 

 

3,294,485

 

 

 

2.5

%

 

 

23.93

 

FBI - Birmingham

 

Birmingham, AL

 

Office

 

2020

 

2005

 

 

96,278

 

 

 

3,204,123

 

 

 

2.4

%

 

 

33.28

 

AOC - El Centro

 

El Centro, CA

 

Courthouse/Office

 

2019

 

2004

 

 

46,813

 

 

 

3,099,437

 

 

 

2.4

%

 

 

66.21

 

OSHA - Sandy

 

Sandy, UT

 

Laboratory

 

2024

 

2003

 

 

75,000

 

 

 

2,972,464

 

 

 

2.3

%

 

 

39.63

 

USFS II - Albuquerque

 

Albuquerque, NM

 

Office

 

2026

 

2011

 

 

98,720

 

 

 

2,856,835

 

 

 

2.2

%

 

 

28.94

 

ICE - Albuquerque

 

Albuquerque, NM

 

Office

 

2027

 

2011

 

 

71,100

 

 

 

2,794,202

 

 

 

2.1

%

 

 

39.30

 

DEA - Vista

 

Vista, CA

 

Laboratory

 

2020

 

2002

 

 

54,119

 

 

 

2,777,302

 

 

 

2.1

%

 

 

51.32

 

DEA - Pleasanton

 

Pleasanton, CA

 

Laboratory

 

2035

 

2015

 

 

42,480

 

 

 

2,770,028

 

 

 

2.1

%

 

 

65.21

 

USFS I - Albuquerque

 

Albuquerque, NM

 

Office

 

2021

 

2006

 

 

92,455

 

 

 

2,737,373

 

 

 

2.1

%

 

 

29.61

 

FBI - Richmond

 

Richmond, VA

 

Office

 

2021

 

2001

 

 

96,607

 

 

 

2,722,195

 

 

 

2.1

%

 

 

28.18

 

AOC - Del Rio

 

Del Rio, TX

 

Courthouse/Office

 

2024

 

1992 / 2004

 

 

89,880

 

 

 

2,667,861

 

 

 

2.0

%

 

 

29.68

 

DEA - Dallas Lab

 

Dallas, TX

 

Laboratory

 

2021

 

2001

 

 

49,723

 

 

 

2,419,214

 

 

 

1.8

%

 

 

48.65

 

FBI - Little Rock

 

Little Rock, AR

 

Office

 

2021

 

2001

 

 

101,977

 

 

 

2,210,363

 

 

 

1.7

%

 

 

21.68

 

MEPCOM - Jacksonville

 

Jacksonville, FL

 

Office

 

2025

 

2010

 

 

30,000

 

 

 

2,183,870

 

 

 

1.7

%

 

 

72.80

 

CBP - Savannah

 

Savannah, GA

 

Laboratory

 

2033

 

2013

 

 

35,000

 

 

 

2,118,784

 

 

 

1.6

%

 

 

60.54

 

FBI - Albany

 

Albany, NY

 

Office

 

2018

 

1998

 

 

98,184

 

 

 

2,099,733

 

 

 

1.6

%

 

 

21.39

 

DEA - Santa Ana

 

Santa Ana, CA

 

Office

 

2024

 

2004

 

 

39,905

 

 

 

2,077,243

 

 

 

1.6

%

 

 

52.05

 

DOE - Lakewood

 

Lakewood, CO

 

Office

 

2029

 

1999

 

 

115,650

 

 

 

2,068,524

 

 

 

1.6

%

 

 

17.89

 

DEA - Dallas

 

Dallas, TX

 

Office

 

2021

 

2001

 

 

71,827

 

 

 

1,777,432

 

 

 

1.4

%

 

 

24.75

 

ICE - Otay

 

San Diego, CA

 

Office

 

2022 / 2026

 

2001

 

 

52,881

 

 

 

1,752,325

 

 

 

1.3

%

 

 

35.43

 

 

 

`14


Operating Property Overview (Cont.)

(As of December 31, 2017, unaudited)

 

 

 

Property Name

 

Location

 

Property Type

 

Tenant

Lease

Expiration

Year

 

Year Built /

Renovated

 

Rentable

Square

Feet

 

 

Annualized

Lease

Income

 

 

Percentage

of Total

Annualized

Lease

Income

 

 

Annualized

Lease

Income per

Leased

Square Foot

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S. Government Leased Properties (Cont.)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NPS - Omaha

 

Omaha, NE

 

Office

 

2024

 

2004

 

 

62,772

 

 

 

1,751,754

 

 

 

1.3

%

 

 

27.91

 

DEA - North Highlands

 

Sacramento, CA

 

Office

 

2017

 

2002

 

 

37,975

 

 

 

1,718,174

 

 

 

1.3

%

 

 

45.24

 

CBP - Chula Vista

 

Chula Vista, CA

 

Office

 

2018

 

1998

 

 

59,397

 

 

 

1,710,248

 

 

 

1.3

%

 

 

28.79

 

CBP - Sunburst

 

Sunburst, MT

 

Office

 

2028

 

2008

 

 

33,000

 

 

 

1,597,758

 

 

 

1.2

%

 

 

48.42

 

USCG - Martinsburg

 

Martinsburg, WV

 

Office

 

2027

 

2007

 

 

59,547

 

 

 

1,574,367

 

 

 

1.2

%

 

 

26.44

 

DEA - Birmingham

 

Birmingham, AL

 

Office

 

2020

 

2005

 

 

35,616

 

 

 

1,530,595

 

 

 

1.2

%

 

 

42.97

 

DEA - Otay

 

San Diego, CA

 

Office

 

2018

 

1997

 

 

32,560

 

 

 

1,482,682

 

 

 

1.1

%

 

 

45.54

 

AOC - Aberdeen

 

Aberdeen, MS

 

Courthouse/Office

 

2025

 

2005

 

 

46,979

 

 

 

1,465,665

 

 

 

1.1

%

 

 

31.20

 

DEA - Albany

 

Albany, NY

 

Office

 

2025

 

2004

 

 

31,976

 

 

 

1,340,361

 

 

 

1.0

%

 

 

41.92

 

DEA - Riverside

 

Riverside, CA

 

Office

 

2017

 

1997

 

 

34,354

 

 

 

1,300,282

 

 

 

1.0

%

 

 

37.85

 

AOC - South Bend

 

South Bend, IN

 

Courthouse/Office

 

2027

 

1996 / 2011

 

 

30,119

 

 

 

821,425

 

 

 

0.6

%

 

 

27.27

 

DEA - San Diego

 

San Diego, CA

 

Warehouse

 

2032

 

1999

 

 

16,100

 

 

 

534,011

 

 

 

0.4

%

 

 

33.17

 

SSA - Mission Viejo

 

Mission Viejo, CA

 

Office

 

2020

 

2005

 

 

11,590

 

 

 

487,202

 

 

 

0.4

%

 

 

42.04

 

SSA - San Diego

 

San Diego, CA

 

Office

 

2032

 

2003

 

 

10,856

 

 

 

350,123

 

 

 

0.3

%

 

 

34.81

 

Subtotal

 

 

 

 

 

 

 

 

 

 

3,494,699

 

 

$

130,204,070

 

 

 

99.2

%

 

$

37.30

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Privately Leased Properties

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

5998 Osceola Court - United Technologies

 

Midland, GA

 

Warehouse/Distribution

 

2023

 

2014

 

 

105,641

 

 

 

544,405

 

 

 

0.4

%

 

 

5.15

 

501 East Hunter Street - Lummus Corporation

 

Lubbock, TX

 

Warehouse/Manufacturing

 

2028

 

2013

 

 

70,078

 

 

 

527,804

 

 

 

0.4

%

 

 

7.53

 

Subtotal

 

 

 

 

 

 

 

 

 

 

175,719

 

 

$

1,072,209

 

 

 

0.8

%

 

$

6.10

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total / Weighted Average

 

 

 

 

 

 

 

 

 

 

3,670,418

 

 

$

131,276,279

 

 

 

100.0

%

 

$

35.81

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

`15


Tenants

(As of December 31, 2017, unaudited)

 

 

 

Tenant

 

Number of

Properties

 

 

Number of

Leases

 

 

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Federal Bureau of Investigation ("FBI")

 

 

7

 

 

 

7

 

 

 

5.8

 

 

 

823,368

 

 

 

22.5

%

 

$

26,729,745

 

 

 

20.5

%

Department of Veteran Affairs ("VA")

 

 

2

 

 

 

2

 

 

 

17.6

 

 

 

413,977

 

 

 

11.3

%

 

 

20,005,123

 

 

 

15.2

%

Drug Enforcement Administration ("DEA")

 

 

11

 

 

 

11

 

 

 

4.9

 

 

 

432,142

 

 

 

11.8

%

 

 

19,089,596

 

 

 

14.5

%

Administrative Office of the U.S. Courts ("AOC")

 

 

4

 

 

 

4

 

 

 

5.9

 

 

 

213,791

 

 

 

5.8

%

 

 

8,054,388

 

 

 

6.1

%

Immigration and Customs Enforcement ("ICE")

 

 

3

 

 

 

3

 

 

 

7.9

 

 

 

182,522

 

 

 

5.0

%

 

 

7,670,424

 

 

 

5.8

%

Internal Revenue Service ("IRS")

 

 

1

 

 

 

1

 

 

 

0.9

 

 

 

180,481

 

 

 

4.9

%

 

 

7,476,056

 

 

 

5.7

%

Patent and Trademark Office ("PTO")

 

 

1

 

 

 

2

 

 

 

1.3

 

 

 

189,871

 

 

 

5.2

%

 

 

6,527,124

 

 

 

5.0

%

U.S. Forest Service ("USFS")

 

 

2

 

 

 

2

 

 

 

6.1

 

 

 

191,175

 

 

 

5.2

%

 

 

5,594,208

 

 

 

4.3

%

Customs and Border Protection ("CBP")

 

 

3

 

 

 

3

 

 

 

7.2

 

 

 

127,397

 

 

 

3.5

%

 

 

5,426,790

 

 

 

4.1

%

Environmental Protection Agency ("EPA")

 

 

1

 

 

 

1

 

 

 

5.2

 

 

 

71,979

 

 

 

2.0

%

 

 

4,171,384

 

 

 

3.2

%

Department of Transportation ("DOT")

 

 

1

 

 

 

2

 

 

 

6.3

 

 

 

129,659

 

 

 

3.5

%

 

 

3,738,353

 

 

 

2.8

%

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

 

 

1

 

 

 

1

 

 

 

2.7

 

 

 

137,671

 

 

 

3.8

%

 

 

3,294,485

 

 

 

2.5

%

Occupational Safety and Health Administration ("OSHA")

 

 

1

 

 

 

1

 

 

 

6.1

 

 

 

75,000

 

 

 

2.0

%

 

 

2,972,464

 

 

 

2.3

%

Military Entrance Processing Command ("MEPCOM")

 

 

1

 

 

 

1

 

 

 

7.7

 

 

 

30,000

 

 

 

0.8

%

 

 

2,183,870

 

 

 

1.7

%

Department of Energy ("DOE")

 

 

1

 

 

 

1

 

 

 

11.9

 

 

 

115,650

 

 

 

3.2

%

 

 

2,068,524

 

 

 

1.6

%

National Park Service ("NPS")

 

 

1

 

 

 

1

 

 

 

6.5

 

 

 

62,772

 

 

 

1.7

%

 

 

1,751,754

 

 

 

1.3

%

U.S. Coast Guard ("USCG")

 

 

1

 

 

 

1

 

 

 

10.0

 

 

 

59,547

 

 

 

1.6

%

 

 

1,574,367

 

 

 

1.2

%

Social Security Administration ("SSA")

 

 

2

 

 

 

2

 

 

 

8.5

 

 

 

21,649

 

 

 

0.6

%

 

 

837,325

 

 

 

0.6

%

Bureau of Alcohol, Tobacco, Firearms and Explosives (“ATF”)(2)

 

 

0

 

 

 

0

 

 

 

3.0

 

 

 

8,680

 

 

 

0.2

%

 

 

373,022

 

 

 

0.3

%

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

 

 

0

 

 

 

1

 

 

 

8.0

 

 

 

1,538

 

 

 

0.0

%

 

 

54,999

 

 

 

0.0

%

Subtotal

 

 

44

 

 

 

47

 

 

 

7.0

 

 

 

3,468,869

 

 

 

94.6

%

 

$

129,594,001

 

 

 

98.7

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Private Tenants

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

We Are Sharing Hope SC(3)

 

 

0

 

 

 

1

 

 

 

3.8

 

 

 

21,609

 

 

 

0.6

%

 

$

610,069

 

 

 

0.5

%

United Technologies (Pratt & Whitney)

 

 

1

 

 

 

1

 

 

 

6.0

 

 

 

105,641

 

 

 

2.9

%

 

 

544,405

 

 

 

0.4

%

Lummus Corporation

 

 

1

 

 

 

1

 

 

 

10.6

 

 

 

70,078

 

 

 

1.9

%

 

 

527,804

 

 

 

0.4

%

Subtotal

 

 

2

 

 

 

3

 

 

 

7.4

 

 

 

197,328

 

 

 

5.4

%

 

$

1,682,278

 

 

 

1.3

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total / Weighted Average

 

 

46

 

 

 

50

 

 

 

7.0

 

 

 

3,666,197

 

 

 

100.0

%

 

$

131,276,279

 

 

 

100.0

%

 

(1)Weighted based on leased square feet.

(2)ATF occupies the first floor of the DEA – Birmingham building in a joint lease with the DEA.

(3)LifePoint, Inc. changed its legal name to We Are Sharing Hope SC.

 

 

`16


Lease Expirations

(As of December 31, 2017, unaudited)

 

 

 

Year of Lease Expiration

 

Number of

Leases

Expiring

 

 

Square

Footage

Expiring

 

 

Percentage of

Total Square

Footage

Expiring

 

 

Annualized

Lease Income

Expiring

 

 

Percentage of

Total Annualized

Lease Income

Expiring

 

 

Annualized

Lease Income

per Leased

Square Foot Expiring

 

2017

 

2

 

 

 

72,329

 

 

 

2.0

%

 

$

3,018,456

 

 

 

2.3

%

 

$

41.73

 

2018

 

5

 

 

 

370,622

 

 

 

10.1

%

 

 

12,768,719

 

 

 

9.7

%

 

 

34.45

 

2019

 

2

 

 

 

215,281

 

 

 

5.9

%

 

 

8,859,359

 

 

 

6.7

%

 

 

41.15

 

2020

 

7

 

 

 

356,677

 

 

 

9.7

%

 

 

12,060,909

 

 

 

9.2

%

 

 

33.81

 

2021

 

7

 

 

 

582,782

 

 

 

15.9

%

 

 

17,609,542

 

 

 

13.4

%

 

 

30.22

 

2022

 

2

 

 

 

47,919

 

 

 

1.3

%

 

 

1,697,326

 

 

 

1.3

%

 

 

35.42

 

2023

 

2

 

 

 

177,620

 

 

 

4.8

%

 

 

4,715,789

 

 

 

3.6

%

 

 

26.55

 

2024

 

6

 

 

 

501,978

 

 

 

13.7

%

 

 

17,575,627

 

 

 

13.4

%

 

 

35.01

 

2025

 

3

 

 

 

108,955

 

 

 

3.0

%

 

 

4,989,896

 

 

 

3.8

%

 

 

45.80

 

2026

 

2

 

 

 

100,258

 

 

 

2.7

%

 

 

2,911,834

 

 

 

2.2

%

 

 

29.04

 

2027

 

4

 

 

 

225,890

 

 

 

6.2

%

 

 

8,350,072

 

 

 

6.4

%

 

 

36.97

 

Thereafter

 

8

 

 

 

905,886

 

 

 

24.7

%

 

 

36,718,750

 

 

 

28.0

%

 

 

40.53

 

Total / Weighted Average

 

50

 

 

 

3,666,197

 

 

 

100.0

%

 

$

131,276,279

 

 

 

100.0

%

 

$

35.81

 

 

`17