dea-8k_20200505.htm
false 0001622194 DC 0001622194 2020-05-05 2020-05-05

 

 

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):

May 5, 2020

 

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))

 

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 May 5, 2020, we issued a press release announcing our results of operations for the first quarter ended March 31, 2020. 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 10:00a.m. Eastern Time on May 5, 2020, to review our first quarter 2020 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 May 19,2020, by dialing 1-844-512-2921 (domestic) and 1-412-317-6671 (international) and entering the passcode 13701749. 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 May 5, 2020.

99.2

Easterly Government Properties, Inc. Supplemental Information Package for the quarter ended March 31, 2020.

101.SCH

Inline XBRL Taxonomy Extension Schema Document

101.CAL

Inline XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF

Inline XBRL Taxonomy Extension Definition Linkbase Document

101.LAB

Inline XBRL Taxonomy Extension Label Linkbase Document

101.PRE

Inline XBRL Taxonomy Extension Presentation Linkbase Document

104

Cover Page Interactive Data File (formatted as inline XBRL with applicable taxonomy extension information contained in Exhibits 101.)

 


 

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: May 5, 2020

 

 

dea-ex991_7.htm

 

Exhibit 99.1

 

 

EASTERLY GOVERNMENT PROPERTIES

REPORTS FIRST QUARTER 2020 RESULTS

WASHINGTON, D.C. – May 5, 2020 – 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 March 31, 2020.  

Highlights for the Quarter Ended March 31, 2020:

 

Net income of $1.9 million, or $0.02 per share on a fully diluted basis

 

FFO of $25.5 million, or $0.30 per share on a fully diluted basis

 

FFO, as Adjusted of $24.4 million, or $0.29 per share on a fully diluted basis

 

CAD of $21.8 million

 

Acquired a 101,285-square foot Defense Health Agency (DHA) facility in Aurora, Colorado (“DHA - Aurora")

 

Acquired a 203,269-square foot Federal Bureau of Investigation (FBI) and Drug Enforcement Administration (DEA) Federal Justice Center in El Paso, Texas (“FBI / DEA - El Paso”) for approximately $38.7 million, including consideration of approximately $21.6 million in operating partnership units valued at $24.75 per unit

 

Sold and issued 200,000 shares of the Company’s common stock through the Company’s March 2019 ATM Program at a net weighted average price of $24.17 per share, raising net proceeds to the Company of approximately $4.8 million

 

During and subsequent to the quarter, entered into forward sales transactions under the March 2019 Program and the Company’s December 2019 ATM Program for the sale of an additional 3,811,021 shares of the Company’s common stock, at a weighted average initial forward sales price of $26.75 per share, that have not yet been settled

 

Assuming the Company’s total 6,689,724 shares bound by forward sales transactions under the Company’s ATM Programs are physically settled in full, utilizing a weighted average initial forward sales price of $25.06 per share, the Company expects to receive net proceeds of approximately $166.0 million

 

“The first quarter of 2020 was one the American people, and the world, will remember for a very long time,” said William C. Trimble, III, Easterly’s Chief Executive Officer. “During this time of crisis, I am proud Easterly Government Properties is providing the critical real estate infrastructure that is imperative for fulfilling U.S. Government missions at a time of maximum need. Further, our ability to expand the portfolio through accretive acquisitions during this period highlights our differentiated strategy within the REIT sector.”

 

Portfolio Operations

As of March 31, 2020, the Company wholly owned 72 operating properties in the United States, encompassing approximately 6.8 million square feet in the aggregate, including 70 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 March 31, 2020, the portfolio had a weighted average age of 13.1 years, based upon the date

 


 

 

 

 

the property was built or renovated-to-suit, was 100% leased, and had a weighted average remaining lease term of 7.7 years.  

The Company currently has two active build-to-suit projects, each for the beneficial use of the Food and Drug Administration (FDA), totaling approximately 222,000-square feet. One project – the 59,690-square foot FDA laboratory in Lenexa, Kansas – is under construction. The second project – the approximately 162,000-square foot FDA laboratory in Atlanta, Georgia – is in the design development stage. Separate 20-year leases with the General Services Administration (GSA) will commence at each of the locations upon completion.

 

Acquisitions and Development Activities

On January 7, 2020, the Company acquired a 101,285-square foot DHA mission critical facility in Aurora, Colorado. DHA - Aurora, a build-to-suit property specifically constructed for the DHA, was originally built in 1998 and underwent a sizeable renovation in 2018 upon the execution of a new 15-year lease. The facility is 100% leased to the GSA for the beneficial use of the DHA with a lease expiration of April 2034. This facility houses a portion of the DHA’s health insurance program, referred to as TRICARE. The TRICARE Program is responsible for providing insurance to approximately 9.5 million beneficiaries through private medical providers or the DHA’s own network of 51 military hospitals, 424 military medical clinics and 248 dental facilities located worldwide.

On March 26, 2020, the Company acquired a 203,269-square foot FBI and DEA Federal Justice Center in El Paso, Texas. FBI / DEA - El Paso is a three-building compound constructed in stages between the years of 1998 and 2005 and is 100% leased for the beneficial use of the FBI and DEA under three leases that all expire in July 2028. FBI / DEA - El Paso serves as one of the 56 Field Offices for the FBI as well as one of the DEA’s 23 Domestic Division Offices, both with a strategic location near the U.S / Mexico border. An FBI Field Office and a DEA Division Office are both considered the highest field level within their respective organizations. In partnership together since 1998, the two organizations are co-located in this space to combat the ongoing issues with illicit drugs coming into the country from across the border.

Balance Sheet and Capital Markets Activity

As of March 31, 2020, the Company had total indebtedness of $942.9 million comprised of $36.0 million outstanding on its revolving credit facility, $100.0 million outstanding on its 2016 term loan facility, $150.0 million outstanding on its 2018 term loan facility, $450.0 million of senior unsecured notes, and $206.9 million of mortgage debt (excluding unamortized premiums and discounts and deferred financing fees). At March 31, 2020, Easterly’s outstanding debt had a weighted average maturity of 7.6 years and a weighted average interest rate of 3.7%. As of March 31, 2020, Easterly’s Net Debt to total enterprise value was 30.6% and its Net Debt to annualized quarterly EBITDA and Adjusted Net Debt to annualized quarterly pro forma EBITDA ratios were 6.7x and 6.3x, respectively.

During the quarter ended March 31, 2020, the Company sold and issued 200,000 shares of the Company’s common stock through the Company’s March 2019 ATM Program at a net weighted average price of $24.17 per share, raising net proceeds to the Company of approximately $4.8 million. The Company also entered into forward sales transactions under the March 2019 ATM Program for the sale of an additional 523,397 shares of our common stock that have not yet been settled. Assuming the forward sales transactions are physically settled in full utilizing a weighted average initial forward sales price of $24.87 per share, we expect to receive net proceeds of approximately $12.9 million.

 


 

 

 

 

Dividend

On April 29, 2020, the Board of Directors of Easterly approved a cash dividend for the first quarter of 2020 in the amount of $0.26 per common share. The dividend will be payable June 25, 2020 to shareholders of record on May 14, 2020.  

Subsequent Events

On April 6, 2020, the Company announced the acquisition of a 79,212-square foot Department of Veterans Affairs (VA) Outpatient Clinic in Mobile, Alabama (“VA – Mobile”). VA - Mobile, part of the Gulf Coast Veterans Health Care System, is a build-to-suit outpatient clinic that was recently completed in 2018. This modern facility sits on a roughly 13-acre campus and is subject to an initial 15-year non-cancelable lease term that expires in December 2033. The facility provides a wide range of medical and ancillary services including primary care, mental health services and laboratory services. This facility replaced the prior VA clinic in Mobile, Alabama to help address the needs of the approximately 54,000 veterans in the surrounding region.

On May 4, 2020, the Company announced the acquisition of a 51,647-square foot VA Outpatient Clinic in Chico, California (“VA - Chico”). VA - Chico is a brand-new, build-to-suit facility that was recently completed in mid-2019. The state-of-the-art facility is designed to achieve a LEED healthcare Silver certification and is leased to the VA for an initial, non-cancelable lease term of 15 years that expires in June 2034. The facility provides a wide range of medical and ancillary services including primary care, audiology, laboratory services, mental health, nutrition, otolaryngology (ENT), a pharmacy, social work and women’s health. The facility is located adjacent to the Chico VA Readjustment Counseling Service Center.

Subsequent to quarter end, the Company entered into forward sales transactions under the Company’s ATM Programs for the sale of an additional 3,287,624 shares of the Company’s common stock that have not yet been settled.  Assuming the forward sales transactions are physically settled in full utilizing a weighted average initial forward sales price of $27.04 per share, the Company expects to receive net proceeds of approximately $88.0 million.

The Company currently has a total of 6,689,724 shares bound by forward sales transactions under the Company’s ATM Programs that have not yet been settled.  Assuming the forward sales transactions are physically settled in full utilizing a weighted average initial forward sales price of $25.06 per share, the Company expects to receive net proceeds of approximately $166.0 million.

Guidance

Outlook for the 12 Months Ending December 31, 2020

The Company is reiterating its guidance for 2020 FFO per share on a fully diluted basis in a range of $1.22 - $1.24.

 

  

Low

 

  

High

 

Net income (loss) per share – fully diluted basis

  

$

0.10

 

 

 

0.12

  

Plus: real estate depreciation and amortization

  

$

1.12

 

 

 

1.12

  

FFO per share – fully diluted basis

 

$  

1.22

 

 

 

1.24

 

  

This guidance assumes $200 million of acquisitions and $40 - $50 million of gross development-related investment during 2020.

 

 


 

 

 

 

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 and quarterly report on Form 10-Q, 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, 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, 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 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, amortization of above-/below-market leases, amortization of deferred revenue (which results from landlord assets funded by tenants), non-cash interest expense, non-cash compensation and other non-cash items. By excluding these income and expense items 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. Certain prior year amounts have been updated to conform to the current year FFO, as Adjusted definition.

 


 

 

 

 

Net Debt and Adjusted Net Debt. Net Debt represents consolidated debt (reported in accordance with GAAP) adjusted to exclude unamortized premiums and discounts and deferred financing fees, less cash and cash equivalents. 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) the lesser of i) anticipated lump-sum reimbursement amounts and ii) the cost to date for each project under construction and 2) 40% times the amount by which the cost to date exceeds anticipated lump-sum reimbursement amounts for each project under construction. These adjustments are made to 1) remove the estimated portion of each project under construction that has been financed with debt which may be repaid with anticipated cost reimbursement payments from the US Government and 2) remove the estimated portion of each project under construction, in excess of anticipated lump-sum reimbursements, that has been financed with debt but has not yet produced earnings. See page 20 of the Company’s Q1 2020 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, accordingly, may not be comparable to such other REITs.

Other Notes and Definitions

For purposes of calculating square feet and percent leased at DHA - Aurora and percent leased with respect to our total portfolio, 15,215 square feet at DHA - Aurora were excluded from total rentable square feet as the Company attributed no value to this space at acquisition

Fully diluted basis assumes the exchange of all outstanding common units representing limited partnership interests in the Company’s operating partnership, 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 10:00 a.m. Eastern Daylight time on May 5, 2020 to review the first quarter 2020 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 May 19, 2020 by dialing 844-512-2921 (domestic) and 1-412-317-6671 (international) and entering the passcode 13701749. 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 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

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; the risk of decreased rental rates or increased vacancy rates; loss of key personnel; the adverse impact of the novel coronavirus (COVID-19) on the U.S., regional and global economies and the financial condition and results of operations of the Company; 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, 2019, filed with the Securities and Exchange Commission on February 25, 2020 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.

 


 

 

 

 

Balance Sheet

(Unaudited, in thousands, except share amounts)

 

 

 

March 31, 2020

 

 

December 31, 2019

 

Assets

 

 

 

 

 

 

 

 

Real estate properties, net

 

$

2,040,468

 

 

$

1,988,726

 

Cash and cash equivalents

 

 

14,519

 

 

 

12,012

 

Restricted cash

 

 

4,088

 

 

 

3,537

 

Deposits on acquisitions

 

 

1,800

 

 

 

1,800

 

Rents receivable

 

 

27,219

 

 

 

27,788

 

Accounts receivable

 

 

14,750

 

 

 

15,820

 

Deferred financing, net

 

 

1,571

 

 

 

1,749

 

Intangible assets, net

 

 

171,883

 

 

 

168,625

 

Interest rate swaps

 

 

-

 

 

 

541

 

Prepaid expenses and other assets

 

 

31,027

 

 

 

13,991

 

Total assets

 

$

2,307,325

 

 

$

2,234,589

 

 

 

 

 

 

 

 

 

 

Liabilities

 

 

 

 

 

 

 

 

Revolving credit facility

 

 

36,000

 

 

 

-

 

Term loan facilities, net

 

 

248,693

 

 

 

248,602

 

Notes payable, net

 

 

446,987

 

 

 

446,927

 

Mortgage notes payable, net

 

 

205,471

 

 

 

206,312

 

Intangible liabilities, net

 

 

31,219

 

 

 

24,578

 

Deferred revenue

 

 

74,608

 

 

 

54,659

 

Interest rate swaps

 

 

15,142

 

 

 

5,837

 

Accounts payable, accrued expenses, and other liabilities

 

 

52,003

 

 

 

47,833

 

Total liabilities

 

 

1,110,123

 

 

 

1,034,748

 

 

 

 

 

 

 

 

 

 

Equity

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

 

75,077,197 and 74,832,292 shares issued and outstanding at

March 31, 2020 and December 31, 2019, respectively.

 

 

751

 

 

 

748

 

Additional paid-in capital

 

 

1,270,758

 

 

 

1,257,319

 

Retained earnings

 

 

21,701

 

 

 

20,004

 

Cumulative dividends

 

 

(230,276

)

 

 

(210,760

)

Accumulated other comprehensive loss

 

 

(13,276

)

 

 

(4,690

)

Total stockholders' equity

 

 

1,049,658

 

 

 

1,062,621

 

Non-controlling interest in Operating Partnership

 

 

147,544

 

 

 

137,220

 

Total equity

 

 

1,197,202

 

 

 

1,199,841

 

Total liabilities and equity

 

$

2,307,325

 

 

$

2,234,589

 

 


 

 

 

 

Income Statement

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

 

 

 

Three Months Ended

 

 

 

 

March 31, 2020

 

 

March 31, 2019

 

 

Revenues

 

 

 

 

 

 

 

 

 

Rental income

 

$

56,583

 

 

$

48,488

 

 

Tenant reimbursements

 

 

1,152

 

 

 

1,584

 

 

Other income

 

 

483

 

 

 

535

 

 

Total revenues

 

 

58,218

 

 

 

50,607

 

 

 

 

 

 

 

 

 

 

 

 

Expenses

 

 

 

 

 

 

 

 

 

Property operating

 

 

11,258

 

 

 

9,963

 

 

Real estate taxes

 

 

6,562

 

 

 

5,755

 

 

Depreciation and amortization

 

 

23,556

 

 

 

22,451

 

 

Acquisition costs

 

 

538

 

 

 

470

 

 

Corporate general and administrative

 

 

5,483

 

 

 

4,317

 

 

Total expenses

 

 

47,397

 

 

 

42,956

 

 

 

 

 

 

 

 

 

 

 

 

Other expenses

 

 

 

 

 

 

 

 

 

Interest expense, net

 

 

(8,903

)

 

 

(8,132

)

 

Net income (loss)

 

 

1,918

 

 

 

(481

)

 

 

 

 

 

 

 

 

 

 

 

Non-controlling interest in Operating Partnership

 

 

(221

)

 

 

65

 

 

Net income (loss) available to Easterly Government

 

 

 

 

 

 

 

 

 

Properties, Inc.

 

$

1,697

 

 

$

(416

)

 

 

 

 

 

 

 

 

 

 

 

Net income (loss) available to Easterly Government

 

 

 

 

 

 

 

 

 

Properties, Inc. per share:

 

 

 

 

 

 

 

 

 

Basic

 

$

0.02

 

 

$

(0.01

)

 

Diluted

 

$

0.02

 

 

$

(0.01

)

 

 

 

 

 

 

 

 

 

 

 

Weighted-average common shares outstanding:

 

 

 

 

 

 

 

 

 

Basic

 

 

74,892,711

 

 

 

61,225,926

 

 

Diluted

 

 

75,616,233

 

 

 

61,225,926

 

 

 

 

 

 

 

 

 

 

 

 

Net income (loss), per share - fully diluted basis

 

$

0.02

 

 

$

(0.01

)

 

 

 

 

 

 

 

 

 

 

 

Weighted average common shares outstanding -

 

 

 

 

 

 

 

 

 

fully diluted basis

 

 

84,735,095

 

 

 

70,831,727

 

 

 

 


 

 

 

 

EBITDA, FFO and CAD

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

 

 

 

Three Months Ended

 

 

 

 

March 31, 2020

 

 

March 31, 2019

 

 

Net income (loss)

 

$

1,918

 

 

$

(481

)

 

Depreciation and amortization

 

 

23,556

 

 

 

22,451

 

 

Interest expense

 

 

8,903

 

 

 

8,132

 

 

Tax expense

 

 

89

 

 

 

118

 

 

EBITDA

 

$

34,466

 

 

$

30,220

 

 

 

 

 

 

 

 

 

 

 

 

Pro forma adjustments(1)

 

 

595

 

 

 

 

 

 

Pro forma EBITDA

 

$

35,061

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income (loss)

 

$

1,918

 

 

$

(481

)

 

Depreciation and amortization

 

 

23,556

 

 

 

22,451

 

 

FFO

 

$

25,474

 

 

$

21,970

 

 

Adjustments to FFO:

 

 

 

 

 

 

 

 

 

Acquisition costs

 

 

538

 

 

 

470

 

 

Straight-line rent and other non-cash adjustments

 

 

(709

)

 

 

(974

)

 

Amortization of above-/below-market leases

 

 

(1,521

)

 

 

(1,729

)

 

Amortization of deferred revenue

 

 

(697

)

 

 

(67

)

 

Non-cash interest expense

 

 

358

 

 

 

322

 

 

Non-cash compensation

 

 

1,000

 

 

 

734

 

 

FFO, as Adjusted

 

$

24,443

 

 

$

20,726

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

FFO, per share - fully diluted basis

 

$

0.30

 

 

$

0.31

 

 

FFO, as Adjusted, per share - fully diluted basis

 

$

0.29

 

 

$

0.29

 

 

 

 

 

 

 

 

 

 

 

 

FFO, as Adjusted

 

$

24,443

 

 

$

20,726

 

 

Acquisition costs

 

 

(538

)

 

 

(470

)

 

Principal amortization

 

 

(870

)

 

 

(836

)

 

Maintenance capital expenditures

 

 

(877

)

 

 

(902

)

 

Contractual tenant improvements

 

 

(325

)

 

 

(38

)

 

Cash Available for Distribution (CAD)

 

$

21,833

 

 

$

18,480

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average common shares outstanding -

 

 

 

 

 

 

 

 

 

fully diluted basis

 

 

84,735,095

 

 

 

70,831,727

 

 

 

1 Pro forma assuming a full quarter of operations from the two properties acquired in the first quarter of 2020.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


 

 

 

 

Net Debt and Adjusted Net Debt

(Unaudited, in thousands)

 

 

March 31, 2020

 

 

Total Debt(1)

$

942,884

 

 

Less: cash and cash equivalents

 

(14,519

)

 

Net Debt

$

928,365

 

 

Less: adjustment for projects under construction(2)

 

(46,295

)

 

Adjusted Net Debt

$

882,070

 

 

 

 

 

 

 

 

1 Excludes unamortized premiums / discounts and deferred financing fees.

2 See definition of Adjusted Net Debt on Page 4.

 

 

 

 

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; the risk of decreased rental rates or increased vacancy rates; loss of key personnel; the adverse impact of the novel coronavirus (COVID-19) on the U.S., regional and global economies and the financial condition and results of operations of the Company; 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, 2019, filed with the Securities and Exchange Commission, or the SEC, on February 25, 2020 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 quarter ended March 31, 2020 that will be released on Form 10-Q to be filed on or about May 5, 2020.

 

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 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 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.

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.

EBITDA is calculated as the sum of net income (loss) before interest expense, 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, 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.

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 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, amortization of above-/below-market leases, amortization of deferred revenue (which results from landlord assets funded by tenants), non-cash interest expense, non-cash compensation and other non-cash items. By excluding these income and expense items from FFO, as Adjusted, the Company believes it provides useful information as these items have no cash impact. In addition, by excluding acquisition

3


Supplemental Definitions

 

 

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. Certain prior year amounts have been updated to conform to the current year FFO, as Adjusted definition.

Net Operating Income (NOI) and Cash NOI. NOI is calculated as net income plus depreciation and amortization, acquisition costs, corporate general and administrative costs, interest expense and gains or losses from sales of property. Cash NOI excludes from NOI straight-line rent, amortization of above-/below-market leases, and amortization of deferred revenue (which results from landlord assets funded by tenants). 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. Certain prior year amounts have been updated to conform to the current year Cash NOI definition.

Net Debt and Adjusted Net Debt. Net Debt represents consolidated debt (reported in accordance with GAAP) adjusted to exclude unamortized premiums and discounts and deferred financing fees, less cash and cash equivalents. 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) the lesser of i) anticipated lump-sum reimbursement amounts and ii) the cost to date for each project under construction and 2) 40% times the amount by which the cost to date exceeds anticipated lump-sum reimbursement amounts for each project under construction. These adjustments are made to 1) remove the estimated portion of each project under construction that has been financed with debt which may be repaid with anticipated cost reimbursement payments from the US Government and 2) remove the estimated portion of each project under construction, in excess of anticipated lump-sum reimbursements, that has been financed with debt but has not yet produced earnings. See page 20 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, accordingly, may not be comparable to such other REITs.

 

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

 

17

 

 

 

Lease Expirations

 

19

 

 

 

Summary of Re/Development Projects

 

20

 

 

 

 

 

 

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, Lead Independent Director

Michael Ibe

Michael Ibe, Vice-Chairman and EVP

Meghan Baivier, CFO & COO

Darrell Crate

Tara Innes

Alison Bernard, CAO

Ronald Kendall, EVP

Cynthia Fisher

James Mead

Andrew Pulliam, EVP

 

Emil Henry Jr.

William Trimble III

 

 

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

Compass Point Research & Trading, LLC

Jonathan Petersen / Peter Abramowitz

Michael R. Lewis

Merrill Ross

212-284-1705 / 212-336-7241

212-319-5659

202-534-1392

 

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)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Outstanding Classes of Stock and Partnership Units - Fully Diluted Basis

 

At March 31, 2020

 

 

Earnings

 

 

Three months ended

March 31, 2020

 

 

Three months ended

March 31, 2019

 

Common shares

 

 

74,982,095

 

 

Net income (loss) available to Easterly Government Properties, Inc.

 

$

1,697

 

 

$

(416

)

Unvested restricted shares

 

 

95,102

 

 

Net income (loss) available to Easterly Government Properties, Inc.

 

 

 

 

 

 

 

 

Common partnership and vested LTIP units

 

 

10,553,176

 

 

per share:

 

 

 

 

 

 

 

 

 

Total - fully diluted basis

 

 

85,630,373

 

 

Basic

 

 

$

0.02

 

 

$

(0.01

)

 

 

 

 

 

 

Diluted

 

 

$

0.02

 

 

$

(0.01

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Market Capitalization

 

At March 31, 2020

 

 

Net income (loss)

 

 

$

1,918

 

 

$

(481

)

Price of Common Shares

 

$

24.64

 

 

Net income (loss), per share - fully diluted basis

 

 

$

0.02

 

 

$

(0.01

)

Total equity market capitalization - fully diluted basis

 

$

2,109,932

 

 

Funds From Operations (FFO)

 

 

$

25,474

 

 

$

21,970

 

Net Debt

 

 

928,365

 

 

FFO, per share - fully diluted basis

 

 

$

0.30

 

 

$

0.31

 

Total enterprise value

 

$

3,038,297

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

FFO, as Adjusted

 

 

$

24,443

 

 

$

20,726

 

 

 

 

 

 

 

FFO, as Adjusted, per share - fully diluted basis

 

 

$

0.29

 

 

$

0.29

 

Ratios

 

At March 31, 2020

 

 

 

 

 

 

 

 

 

 

 

 

Net debt to total enterprise value

 

 

30.6

%

 

Cash Available for Distribution (CAD)

 

 

$

21,833

 

 

$

18,480

 

Net debt to annualized quarterly EBITDA

 

 

6.7

x

 

 

 

 

 

 

 

 

 

 

 

Adjusted Net Debt to annualized quarterly pro

 

 

 

 

 

Liquidity

 

 

 

 

 

 

At March 31, 2020

 

forma EBITDA

 

 

6.3

x

 

Cash and cash equivalents

 

 

 

 

 

 

$

14,519

 

Cash interest coverage ratio

 

 

4.0

x

 

 

 

 

 

 

 

 

 

 

 

Cash fixed charge coverage ratio

 

 

3.7

x

 

Available under $450 million unsecured revolving credit facility(1)

 

 

$

414,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1)Revolving 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 revolving credit facility size of not more than $700 million.

 

7


Balance Sheets

(Unaudited, in thousands, except share amounts)

 

 

 

 

 

March 31, 2020

 

 

December 31, 2019

 

Assets

 

 

 

 

 

 

 

 

Real estate properties, net

 

$

2,040,468

 

 

$

1,988,726

 

Cash and cash equivalents

 

 

14,519

 

 

 

12,012

 

Restricted cash

 

 

4,088

 

 

 

3,537

 

Deposits on acquisitions

 

 

1,800

 

 

 

1,800

 

Rents receivable

 

 

27,219

 

 

 

27,788

 

Accounts receivable

 

 

14,750

 

 

 

15,820

 

Deferred financing, net

 

 

1,571

 

 

 

1,749

 

Intangible assets, net

 

 

171,883

 

 

 

168,625

 

Interest rate swaps

 

 

-

 

 

 

541

 

Prepaid expenses and other assets

 

 

31,027

 

 

 

13,991

 

Total assets

 

$

2,307,325

 

 

$

2,234,589

 

 

 

 

 

 

 

 

 

 

Liabilities

 

 

 

 

 

 

 

 

Revolving credit facility

 

 

36,000

 

 

 

-

 

Term loan facilities, net

 

 

248,693

 

 

 

248,602

 

Notes payable, net

 

 

446,987

 

 

 

446,927

 

Mortgage notes payable, net

 

 

205,471

 

 

 

206,312

 

Intangible liabilities, net

 

 

31,219

 

 

 

24,578

 

Deferred revenue

 

 

74,608

 

 

 

54,659

 

Interest rate swaps

 

 

15,142

 

 

 

5,837

 

Accounts payable, accrued expenses, and other liabilities

 

 

52,003

 

 

 

47,833

 

Total liabilities

 

 

1,110,123

 

 

 

1,034,748

 

 

 

 

 

 

 

 

 

 

Equity

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

 

75,077,197 and 74,832,292 shares issued and outstanding at

March 31, 2020 and December 31, 2019, respectively.

 

 

751

 

 

 

748

 

Additional paid-in capital

 

 

1,270,758

 

 

 

1,257,319

 

Retained earnings

 

 

21,701

 

 

 

20,004

 

Cumulative dividends

 

 

(230,276

)

 

 

(210,760

)

Accumulated other comprehensive loss

 

 

(13,276

)

 

 

(4,690

)

Total stockholders' equity

 

 

1,049,658

 

 

 

1,062,621

 

Non-controlling interest in Operating Partnership

 

 

147,544

 

 

 

137,220

 

Total equity

 

 

1,197,202

 

 

 

1,199,841

 

Total liabilities and equity

 

$

2,307,325

 

 

$

2,234,589

 

 

 

 

 

8


Income Statements

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

 

 

 

 

 

Three Months Ended

 

 

 

 

March 31, 2020

 

 

March 31, 2019

 

 

Revenues

 

 

 

 

 

 

 

 

 

Rental income

 

$

56,583

 

 

$

48,488

 

 

Tenant reimbursements

 

 

1,152

 

 

 

1,584

 

 

Other income

 

 

483

 

 

 

535

 

 

Total revenues

 

 

58,218

 

 

 

50,607

 

 

 

 

 

 

 

 

 

 

 

 

Expenses

 

 

 

 

 

 

 

 

 

Property operating

 

 

11,258

 

 

 

9,963

 

 

Real estate taxes

 

 

6,562

 

 

 

5,755

 

 

Depreciation and amortization

 

 

23,556

 

 

 

22,451

 

 

Acquisition costs

 

 

538

 

 

 

470

 

 

Corporate general and administrative

 

 

5,483

 

 

 

4,317

 

 

Total expenses

 

 

47,397

 

 

 

42,956

 

 

 

 

 

 

 

 

 

 

 

 

Other expenses

 

 

 

 

 

 

 

 

 

Interest expense, net

 

 

(8,903

)

 

 

(8,132

)

 

Net income (loss)

 

 

1,918

 

 

 

(481

)

 

 

 

 

 

 

 

 

 

 

 

Non-controlling interest in Operating Partnership

 

 

(221

)

 

 

65

 

 

Net income (loss) available to Easterly Government

 

 

 

 

 

 

 

 

 

Properties, Inc.

 

$

1,697

 

 

$

(416

)

 

 

 

 

 

 

 

 

 

 

 

Net income (loss) available to Easterly Government

 

 

 

 

 

 

 

 

 

Properties, Inc. per share:

 

 

 

 

 

 

 

 

 

Basic

 

$

0.02

 

 

$

(0.01

)

 

Diluted

 

$

0.02

 

 

$

(0.01

)

 

 

 

 

 

 

 

 

 

 

 

Weighted-average common shares outstanding:

 

 

 

 

 

 

 

 

 

Basic

 

 

74,892,711

 

 

 

61,225,926

 

 

Diluted

 

 

75,616,233

 

 

 

61,225,926

 

 

 

 

 

 

 

 

 

 

 

 

Net income (loss), per share - fully diluted basis

 

$

0.02

 

 

$

(0.01

)

 

 

 

 

 

 

 

 

 

 

 

Weighted average common shares outstanding -

 

 

 

 

 

 

 

 

 

fully diluted basis

 

 

84,735,095

 

 

 

70,831,727

 

 

 

9


Net Operating Income

(Unaudited, in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

 

 

 

 

March 31, 2020

 

 

March 31, 2019

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income (loss)

 

$

1,918

 

 

$

(481

)

 

 

Depreciation and amortization

 

 

23,556

 

 

 

22,451

 

 

 

Acquisition costs

 

 

538

 

 

 

470

 

 

 

Corporate general and administrative

 

 

5,483

 

 

 

4,317

 

 

 

Interest expense

 

 

8,903

 

 

 

8,132

 

 

 

Net Operating Income

 

 

40,398

 

 

 

34,889

 

 

 

Adjustments to Net Operating Income:

 

 

 

 

 

 

 

 

 

 

Straight-line rent and other non-cash adjustments

 

 

(698

)

 

 

(967

)

 

 

Amortization of above-/below-market leases

 

 

(1,521

)

 

 

(1,729

)

 

 

Amortization of deferred revenue

 

 

(697

)

 

 

(67

)

 

 

Cash Net Operating Income

 

$

37,482

 

 

$

32,126

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

10


EBITDA, FFO and CAD

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

 

 

 

 

 

Three Months Ended

 

 

 

 

March 31, 2020

 

 

March 31, 2019

 

 

Net income (loss)

 

$

1,918

 

 

$

(481

)

 

Depreciation and amortization

 

 

23,556

 

 

 

22,451

 

 

Interest expense

 

 

8,903

 

 

 

8,132

 

 

Tax expense

 

 

89

 

 

 

118

 

 

EBITDA

 

$

34,466

 

 

$

30,220

 

 

 

 

 

 

 

 

 

 

 

 

Pro forma adjustments(1)

 

 

595

 

 

 

 

 

 

Pro forma EBITDA

 

$

35,061

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income (loss)

 

$

1,918

 

 

$

(481

)

 

Depreciation and amortization

 

 

23,556

 

 

 

22,451

 

 

FFO

 

$

25,474

 

 

$

21,970

 

 

Adjustments to FFO:

 

 

 

 

 

 

 

 

 

Acquisition costs

 

 

538

 

 

 

470

 

 

Straight-line rent and other non-cash adjustments

 

 

(709

)

 

 

(974

)

 

Amortization of above-/below-market leases

 

 

(1,521

)

 

 

(1,729

)

 

Amortization of deferred revenue

 

 

(697

)

 

 

(67

)

 

Non-cash interest expense

 

 

358

 

 

 

322

 

 

Non-cash compensation

 

 

1,000

 

 

 

734

 

 

FFO, as Adjusted

 

$

24,443

 

 

$

20,726

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

FFO, per share - fully diluted basis

 

$

0.30

 

 

$

0.31

 

 

FFO, as Adjusted, per share - fully diluted basis

 

$

0.29

 

 

$

0.29

 

 

 

 

 

 

 

 

 

 

 

 

FFO, as Adjusted

 

$

24,443

 

 

$

20,726

 

 

Acquisition costs

 

 

(538

)

 

 

(470

)

 

Principal amortization

 

 

(870

)

 

 

(836

)

 

Maintenance capital expenditures

 

 

(877

)

 

 

(902

)

 

Contractual tenant improvements

 

 

(325

)

 

 

(38

)

 

Cash Available for Distribution (CAD)

 

$

21,833

 

 

$

18,480

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average common shares outstanding -

 

 

 

 

 

 

 

 

 

fully diluted basis

 

 

84,735,095

 

 

 

70,831,727

 

 

 

(1)Pro forma assuming a full quarter of operations from the two properties acquired in the first quarter of 2020.

 

11


Debt Schedules

(Unaudited, in thousands)

 

 

 

Debt Instrument

Maturity Date

 

 

March 31, 2020

Interest Rate

 

March 31, 2020

Balance(1)

 

March 31, 2020

Percent of

Total Indebtedness

 

Unsecured debt

 

 

 

 

 

 

 

 

 

 

 

 

 

Revolving Credit facility

18-Jun-22(2)

 

 

LIBOR + 130bps

 

$

36,000

 

3.8%

 

2016 Term Loan facility

29-Mar-24

 

 

2.67%(3)

 

 

100,000

 

10.6%

 

2018 Term Loan facility

19-Jun-23

 

 

3.96%(4)

 

 

150,000

 

15.9%

 

2017 Series A Senior Notes

25-May-27

 

 

4.05%

 

 

95,000

 

10.1%

 

2017 Series B Senior Notes

25-May-29

 

 

4.15%

 

 

50,000

 

5.3%

 

2017 Series C Senior Notes

25-May-32

 

 

4.30%

 

 

30,000

 

3.2%

 

2019 Series A Senior Notes

12-Sep-29

 

 

3.73%

 

 

85,000

 

9.0%

 

2019 Series B Senior Notes

12-Sep-31

 

 

3.83%

 

 

100,000

 

10.6%

 

2019 Series C Senior Notes

12-Sep-34

 

 

3.98%

 

 

90,000

 

9.5%

 

Total unsecured debt

7.8 years

 

 

3.69%

 

$

736,000

 

78.0%

 

 

(wtd-avg maturity)

 

 

(wtd-avg rate)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Secured mortgage debt

 

 

 

 

 

 

 

 

 

 

 

 

 

DEA - Pleasanton

18-Oct-23

 

 

LIBOR + 150bps

 

$

15,700

 

1.7%

 

VA - Golden

1-Apr-24

 

 

5.00%

 

 

9,137

 

1.0%

 

MEPCOM - Jacksonville

14-Oct-25

 

 

4.41%

 

 

8,703

 

0.9%

 

USFS II - Albuquerque

14-Jul-26

 

 

4.46%

 

 

16,171

 

1.7%

 

ICE - Charleston

15-Jan-27

 

 

4.21%

 

 

17,107

 

1.9%

 

VA - Loma Linda

6-Jul-27

 

 

3.59%

 

 

127,500

 

13.5%

 

CBP - Savannah

10-Jul-33

 

 

3.40%

 

 

12,566

 

1.3%

 

Total secured mortgage debt

7.0 years

 

 

3.76%

 

$

206,884

 

22.0%

 

 

(wtd-avg maturity)

 

 

(wtd-avg rate)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Debt Statistics

March 31, 2020

 

 

 

 

 

 

 

 

March 31, 2020

 

Variable rate debt - unhedged

$

51,700

 

 

% Variable rate debt - unhedged

 

 

5.5

%

Fixed rate debt

 

891,184

 

 

% Fixed rate debt

 

 

94.5

%

Total Debt(1)

$

942,884

 

 

 

 

 

 

 

 

 

 

 

Less: cash and cash equivalents

 

(14,519

)

 

Weighted average maturity

 

7.6 years

 

Net Debt

$

928,365

 

 

Weighted average interest rate

 

 

3.7

%

Less: adjustment for projects under construction(5)

 

(46,295

)

 

 

 

 

 

 

 

 

 

 

Adjusted Net Debt

$

882,070

 

 

 

 

 

 

 

 

 

 

 

 

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

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

(3)Calculated based on two interest rate swaps with an aggregate notional value of $100.0 million, which effectively fix the interest rate at 2.67% annually based on the Company’s current leverage ratio.

(4)Calculated based on four interest rate swaps with an aggregate notional value of $150.0 million, which effectively fix the interest rate at 3.96% annually based on the Company’s current leverage ratio.

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

12


Debt Maturities

(Unaudited, in thousands)

 

 

 

 

 

Secured Debt

 

 

Unsecured Debt

 

 

 

 

 

 

 

 

 

 

 

 

 

Year

 

Scheduled

Amortization

 

 

Scheduled

Maturities

 

 

Scheduled

Maturities

 

 

Total

 

 

Percentage of

Debt Maturing

 

 

Weighted Average

Interest Rate of

Scheduled Maturities

 

2020

 

$

2,694

 

 

-

 

 

-

 

 

$

2,694

 

 

 

0.3

%

 

-

 

2021

 

 

4,233

 

 

-

 

 

-

 

 

 

4,233

 

 

 

0.4

%

 

-

 

2022

 

 

5,297

 

 

-

 

 

 

36,000

 

 

 

41,297

 

 

 

4.4

%

 

 

2.13

%

2023

 

 

5,585

 

 

 

15,700

 

 

 

150,000

 

 

 

171,285

 

 

 

18.2

%

 

 

3.88

%

2024

 

 

5,730

 

 

 

8,395

 

 

 

100,000

 

 

 

114,125

 

 

 

12.1

%

 

 

2.86

%

2025

 

 

5,633

 

 

 

1,917

 

 

-

 

 

 

7,550

 

 

 

0.8

%

 

 

4.41

%

2026

 

 

3,686

 

 

 

6,368

 

 

-

 

 

 

10,054

 

 

 

1.1

%

 

 

4.46

%

2027

 

 

1,093

 

 

 

134,640

 

 

 

95,000

 

 

 

230,733

 

 

 

24.5

%

 

 

3.82

%

2028

 

 

983

 

 

-

 

 

-

 

 

 

983

 

 

 

0.1

%

 

-

 

2029

 

 

1,016

 

 

-

 

 

 

135,000

 

 

 

136,016

 

 

 

14.4

%

 

 

3.89

%

2030

 

 

1,049

 

 

-

 

 

-

 

 

 

1,049

 

 

 

0.1

%

 

-

 

2031

 

 

1,081

 

 

-

 

 

 

100,000

 

 

 

101,081

 

 

 

10.7

%

 

 

3.83

%

2032

 

 

1,116

 

 

-

 

 

 

30,000

 

 

 

31,116

 

 

 

3.3

%

 

 

4.30

%

2033

 

 

668

 

 

-

 

 

-

 

 

 

668

 

 

 

0.1

%

 

-

 

2034

 

 

-

 

 

-

 

 

 

90,000

 

 

 

90,000

 

 

 

9.5

%

 

 

3.98

%

Total

 

$

39,864

 

 

$

167,020

 

 

$

736,000

 

 

$

942,884

 

 

 

100.0

%

 

 

 

 

 

 

 

 

13


Operating Property Overview

(As of March 31, 2020, 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

 

 

$

16,278,982

 

 

 

7.4

%

 

$

49.69

 

Various GSA - Buffalo

 

Buffalo, NY

 

Office

 

2020 - 2025

 

2004

 

 

267,766

 

 

 

8,517,219

 

 

 

3.9

%

 

 

31.81

 

JSC - Suffolk

 

Suffolk, VA

 

Office

 

2028

 

1993 / 2004

 

 

403,737

 

 

 

8,106,829

 

 

 

3.6

%

 

 

20.08

 

FBI - Salt Lake

 

Salt Lake City, UT

 

Office

 

2032

 

2012

 

 

169,542

 

 

 

6,816,845

 

 

 

3.1

%

 

 

40.21

 

Various GSA - Portland

 

Portland, OR

 

Office

 

2020 - 2025

 

2002

 

 

223,261

 

 

 

6,639,812

 

 

 

3.0

%

 

 

30.04

 

IRS - Fresno

 

Fresno, CA

 

Office

 

2033

 

2003

 

 

180,481

 

 

 

6,596,324

 

 

 

3.0

%

 

 

36.55

 

Various GSA - Chicago

 

Des Plaines, IL

 

Office

 

2020 / 2022

 

1971 / 1999

 

 

232,759

 

 

 

6,396,579

 

 

 

2.9

%

 

 

28.53

 

VA - San Jose

 

San Jose, CA

 

Outpatient Clinic

 

2038

 

2018

 

 

90,085

 

 

 

5,819,082

 

 

 

2.6

%

 

 

64.60

 

EPA - Lenexa

 

Lenexa, KS

 

Office

 

2027

 

2007 / 2012

 

 

169,585

 

 

 

5,485,256

 

 

 

2.5

%

 

 

32.35

 

FBI - San Antonio

 

San Antonio, TX

 

Office

 

2021

 

2007

 

 

148,584

 

 

 

5,176,951

 

 

 

2.3

%

 

 

34.84

 

PTO - Arlington

 

Arlington, VA

 

Office

 

2035

 

2009

 

 

190,546

 

 

 

5,088,926

 

 

 

2.3

%

 

 

26.71

 

FEMA - Tracy

 

Tracy, CA

 

Warehouse

 

2038

 

2018

 

 

210,373

 

 

 

4,607,609

 

 

 

2.1

%

 

 

21.90

 

FDA - Alameda

 

Alameda, CA

 

Laboratory

 

2039

 

2019

 

 

69,624

 

 

 

4,544,619

 

 

 

2.0

%

 

 

65.27

 

FBI - Omaha

 

Omaha, NE

 

Office

 

2024

 

2009

 

 

112,196

 

 

 

4,423,905

 

 

 

2.0

%

 

 

39.43

 

TREAS - Parkersburg

 

Parkersburg, WV

 

Office

 

2021

 

2004 / 2006

 

 

182,500

 

 

 

4,416,549

 

 

 

2.0

%

 

 

24.20

 

EPA - Kansas City

 

Kansas City, KS

 

Laboratory

 

2023

 

2003

 

 

71,979

 

 

 

4,227,512

 

 

 

1.9

%

 

 

58.73

 

USCIS - Lincoln

 

Lincoln, NE

 

Office

 

2025

 

2005

 

 

137,671

 

 

 

4,112,283

 

 

 

1.8

%

 

 

29.87

 

VA - South Bend

 

Mishakawa, IN

 

Outpatient Clinic

 

2032

 

2017

 

 

86,363

 

 

 

3,964,481

 

 

 

1.8

%

 

 

45.90

 

ICE - Charleston

 

North Charleston, SC

 

Office

 

2021 / 2027

 

1994 / 2012

 

 

86,733

 

 

 

3,828,073

 

 

 

1.7

%

 

 

44.14

 

FBI / DEA - El Paso

 

El Paso, TX

 

Office

 

2028

 

1998 - 2005

 

 

203,269

 

 

 

3,749,781

 

 

 

1.7

%

 

 

18.45

 

FBI - New Orleans

 

New Orleans, LA

 

Office

 

2029

 

1999 / 2006

 

 

137,679

 

 

 

3,644,531

 

 

 

1.6

%

 

 

26.47

 

FBI - Pittsburgh

 

Pittsburgh, PA

 

Office

 

2027

 

2001

 

 

100,054

 

 

 

3,621,776

 

 

 

1.6

%

 

 

36.20

 

DOT - Lakewood

 

Lakewood, CO

 

Office

 

2024

 

2004

 

 

122,225

 

 

 

3,481,840

 

 

 

1.6

%

 

 

28.49

 

FBI - Birmingham

 

Birmingham, AL

 

Office

 

2020

 

2005

 

 

96,278

 

 

 

3,200,326

 

 

 

1.4

%

 

 

33.24

 

USCIS - Tustin

 

Tustin, CA

 

Office

 

2034

 

1979 / 2019

 

 

66,818

 

 

 

3,130,398

 

 

 

1.4

%

 

 

46.85

 

OSHA - Sandy

 

Sandy, UT

 

Laboratory

 

2024

 

2003

 

 

75,000

 

 

 

3,010,308

 

 

 

1.3

%

 

 

40.14

 

USFS II - Albuquerque

 

Albuquerque, NM

 

Office

 

2026

 

2011

 

 

98,720

 

 

 

3,006,955

 

 

 

1.3

%

 

 

30.46

 

FDA - College Park

 

College Park, MD

 

Laboratory

 

2029

 

2004

 

 

80,677

 

 

 

2,987,051

 

 

 

1.3

%

 

 

37.02

 

USFS I - Albuquerque

 

Albuquerque, NM

 

Office

 

2021

 

2006

 

 

92,455

 

 

 

2,874,160

 

 

 

1.3

%

 

 

31.09

 

SSA - Charleston

 

Charleston, WV

 

Office

 

2024

 

1959 / 2000

 

 

110,000

 

 

 

2,844,447

 

 

 

1.3

%

 

 

25.86

 

DEA - Vista

 

Vista, CA

 

Laboratory

 

2020

 

2002

 

 

54,119

 

 

 

2,811,893

 

 

 

1.3

%

 

 

51.96

 

FBI - Richmond

 

Richmond, VA

 

Office

 

2041

 

2001

 

 

96,607

 

 

 

2,773,104

 

 

 

1.2

%

 

 

28.71

 

ICE - Albuquerque

 

Albuquerque, NM

 

Office

 

2027

 

2011

 

 

71,100

 

 

 

2,759,733

 

 

 

1.2

%

 

 

38.81

 

JUD - Del Rio

 

Del Rio, TX

 

Courthouse/Office

 

2024

 

1992 / 2004

 

 

89,880

 

 

 

2,708,959

 

 

 

1.2

%

 

 

30.14

 

FBI - Albany

 

Albany, NY

 

Office

 

2035

 

1998

 

 

98,184

 

 

 

2,695,916

 

 

 

1.2

%

 

 

27.46

 

VA - Northeast

 

Northeast

 

Outpatient Clinic

 

2034

 

2019

 

 

56,330

 

 

 

2,683,810

 

 

 

1.2

%

 

 

47.64

 

DEA - Pleasanton

 

Pleasanton, CA

 

Laboratory

 

2035

 

2015

 

 

42,480

 

 

 

2,682,381

 

 

 

1.2

%

 

 

63.14

 

JUD - El Centro

 

El Centro, CA

 

Courthouse/Office

 

2034

 

2004

 

 

43,345

 

 

 

2,651,832

 

 

 

1.2

%

 

 

61.18

 

 

 

14


Operating Property Overview (Cont.)

(As of March 31, 2020, 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.)

 

DEA - Sterling

 

Sterling, VA

 

Laboratory

 

2020

 

2001

 

 

49,692

 

 

 

2,464,387

 

 

 

1.1

%

 

 

49.59

 

DEA - Dallas Lab

 

Dallas, TX

 

Laboratory

 

2021

 

2001

 

 

49,723

 

 

 

2,442,882

 

 

 

1.1

%

 

 

49.13

 

TREAS - Birmingham

 

Birmingham, AL

 

Office

 

2029

 

2014

 

 

83,676

 

 

 

2,438,892

 

 

 

1.1

%

 

 

29.15

 

DHA - Aurora(1)

 

Aurora, CO

 

Office

 

2034

 

1998 / 2018

 

 

101,285

 

 

 

2,307,291

 

 

 

1.0

%

 

 

22.78

 

DEA - Upper Marlboro

 

Upper Marlboro, MD

 

Laboratory

 

2022

 

2002

 

 

50,978

 

 

 

2,289,287

 

 

 

1.0

%

 

 

44.91

 

FBI - Little Rock

 

Little Rock, AR

 

Office

 

2021

 

2001

 

 

101,977

 

 

 

2,261,585

 

 

 

1.0

%

 

 

22.18

 

MEPCOM - Jacksonville

 

Jacksonville, FL

 

Office

 

2025

 

2010

 

 

30,000

 

 

 

2,204,619

 

 

 

1.0

%

 

 

73.49

 

CBP - Savannah

 

Savannah, GA

 

Laboratory

 

2033

 

2013

 

 

35,000

 

 

 

2,148,957

 

 

 

1.0

%

 

 

61.40

 

DOE - Lakewood

 

Lakewood, CO

 

Office

 

2029

 

1999

 

 

115,650

 

 

 

2,090,035

 

 

 

0.9

%

 

 

18.07

 

DEA - Santa Ana

 

Santa Ana, CA

 

Office

 

2024

 

2004

 

 

39,905

 

 

 

1,875,724

 

 

 

0.8

%

 

 

47.00

 

JUD - Charleston

 

Charleston, SC

 

Courthouse/Office

 

2020

 

1999

 

 

50,888

 

 

 

1,818,135

 

 

 

0.8

%

 

 

35.73

 

NPS - Omaha

 

Omaha, NE

 

Office

 

2024

 

2004

 

 

62,772

 

 

 

1,767,746

 

 

 

0.8

%

 

 

28.16

 

ICE - Otay

 

San Diego, CA

 

Office

 

2022 / 2026

 

2001

 

 

52,881

 

 

 

1,756,238

 

 

 

0.8

%

 

 

35.51

 

VA - Golden

 

Golden, CO

 

Office/Warehouse

 

2026

 

1996 / 2011

 

 

56,753

 

 

 

1,743,712

 

 

 

0.8

%

 

 

30.72

 

DEA - Dallas

 

Dallas, TX

 

Office

 

2021

 

2001

 

 

71,827

 

 

 

1,654,665

 

 

 

0.7

%

 

 

23.04

 

CBP - Sunburst

 

Sunburst, MT

 

Office

 

2028

 

2008

 

 

33,000

 

 

 

1,615,847

 

 

 

0.7

%

 

 

48.97

 

USCG - Martinsburg

 

Martinsburg, WV

 

Office

 

2027

 

2007

 

 

59,547

 

 

 

1,606,290

 

 

 

0.7

%

 

 

26.98

 

DEA - Otay

 

San Diego, CA

 

Office

 

2020

 

1997

 

 

32,560

 

 

 

1,541,726

 

 

 

0.7

%

 

 

47.35

 

DEA - Birmingham

 

Birmingham, AL

 

Office

 

2020

 

2005

 

 

35,616

 

 

 

1,536,465

 

 

 

0.7

%

 

 

43.14

 

JUD - Aberdeen

 

Aberdeen, MS

 

Courthouse/Office

 

2025

 

2005

 

 

46,979

 

 

 

1,485,961

 

 

 

0.7

%

 

 

31.63

 

DEA - North Highlands

 

Sacramento, CA

 

Office

 

2033

 

2002

 

 

37,975

 

 

 

1,443,109

 

 

 

0.6

%

 

 

38.00

 

GSA - Clarksburg

 

Clarksburg, WV

 

Office

 

2024

 

1999

 

 

63,750

 

 

 

1,438,702

 

 

 

0.6

%

 

 

22.57

 

DEA - Albany

 

Albany, NY

 

Office

 

2025

 

2004

 

 

31,976

 

 

 

1,358,508

 

 

 

0.6

%

 

 

42.49

 

DEA - Riverside

 

Riverside, CA

 

Office

 

2032

 

1997

 

 

34,354

 

 

 

1,247,798

 

 

 

0.6

%

 

 

36.32

 

SSA - Dallas

 

Dallas, TX

 

Office

 

2020

 

2005

 

 

27,200

 

 

 

1,074,520

 

 

 

0.5

%

 

 

39.50

 

VA - Baton Rouge

 

Baton Rouge, LA

 

Outpatient Clinic

 

2024

 

2004

 

 

30,000

 

 

 

796,498

 

 

 

0.4

%

 

 

26.55

 

ICE - Pittsburgh

 

Pittsburgh, PA

 

Office

 

2022 / 2023

 

2004

 

 

33,425

 

 

 

795,188

 

 

 

0.4

%

 

 

31.50

 

JUD - South Bend

 

South Bend, IN

 

Courthouse/Office

 

2027

 

1996 / 2011

 

 

30,119

 

 

 

763,191

 

 

 

0.3

%

 

 

25.34

 

DEA - San Diego

 

San Diego, CA

 

Warehouse

 

2032

 

1999

 

 

16,100

 

 

 

537,427

 

 

 

0.2

%

 

 

33.38

 

SSA - Mission Viejo

 

Mission Viejo, CA

 

Office

 

2020

 

2005

 

 

11,590

 

 

 

473,290

 

 

 

0.2

%

 

 

40.84

 

DEA - Bakersfield

 

Bakersfield, CA

 

Office

 

2021

 

2000

 

 

9,800

 

 

 

358,401

 

 

 

0.2

%

 

 

36.57

 

SSA - San Diego

 

San Diego, CA

 

Office

 

2032

 

2003

 

 

10,856

 

 

 

340,052

 

 

 

0.2

%

 

 

33.81

 

Subtotal

 

 

 

 

 

 

 

 

 

 

6,594,473

 

 

$

222,044,165

 

 

 

99.6

%

 

$

33.79

 

 

 

 

 

 

 

 

(1)15,215 square feet at DHA - Aurora were excluded from total rentable square feet as the Company attributed no value to this space at acquisition.

 

15


Operating Property Overview (Cont.)

(As of March 31, 2020, 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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Privately Leased Properties

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

5998 Osceola Court - United Technologies

 

Midland, GA

 

Warehouse/Manufacturing

 

2023

 

2014

 

 

105,641

 

 

 

543,046

 

 

 

0.2

%

 

 

5.14

 

501 East Hunter Street - Lummus Corporation

 

Lubbock, TX

 

Warehouse/Distribution

 

2028

 

2013

 

 

70,078

 

 

 

409,602

 

 

 

0.2

%

 

 

5.84

 

Subtotal

 

 

 

 

 

 

 

 

 

 

175,719

 

 

$

952,648

 

 

 

0.4

%

 

$

5.42

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total / Weighted Average

 

 

 

 

 

 

 

 

 

 

6,770,192

 

 

$

222,996,813

 

 

 

100.0

%

 

$

33.05

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

16


Tenants

(As of March 31, 2020, unaudited)

 

 

 

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Federal Bureau of Investigation ("FBI")

 

 

7.9

 

 

 

1,216,372

 

 

 

18.1

%

 

$

37,901,822

 

 

 

16.9

%

Department of Veteran Affairs ("VA")

 

 

12.5

 

 

 

752,328

 

 

 

11.2

%

 

 

34,678,252

 

 

 

15.6

%

Drug Enforcement Administration ("DEA")

 

 

4.9

 

 

 

630,070

 

 

 

9.3

%

 

 

25,299,825

 

 

 

11.3

%

Environmental Protection Agency ("EPA")

 

 

6.2

 

 

 

241,564

 

 

 

3.6

%

 

 

9,712,768

 

 

 

4.4

%

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

 

 

5.5

 

 

 

261,211

 

 

 

3.9

%

 

 

9,428,078

 

 

 

4.2

%

Internal Revenue Service ("IRS")

 

 

10.4

 

 

 

241,815

 

 

 

3.6

%

 

 

8,604,205

 

 

 

3.9

%

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

 

 

8.2

 

 

 

403,737

 

 

 

6.0

%

 

 

8,106,829

 

 

 

3.6

%

Immigration and Customs Enforcement ("ICE")

 

 

5.2

 

 

 

193,661

 

 

 

2.9

%

 

 

7,937,841

 

 

 

3.6

%

Food and Drug Administration ("FDA")

 

 

14.1

 

 

 

150,301

 

 

 

2.2

%

 

 

7,531,670

 

 

 

3.4

%

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

 

 

8.3

 

 

 

204,489

 

 

 

3.0

%

 

 

7,242,681

 

 

 

3.2

%

Bureau of the Fiscal Service ("BFS")

 

 

3.7

 

 

 

266,176

 

 

 

3.9

%

 

 

6,855,441

 

 

 

3.1

%

Federal Aviation Administration ("FAA")

 

 

0.6

 

 

 

209,970

 

 

 

3.1

%

 

 

6,020,143

 

 

 

2.7

%

U.S. Forest Service ("USFS")

 

 

3.8

 

 

 

191,175

 

 

 

2.8

%

 

 

5,881,115

 

 

 

2.6

%

Social Security Administration ("SSA")

 

 

4.1

 

 

 

200,866

 

 

 

3.0

%

 

 

5,680,546

 

 

 

2.5

%

Patent and Trademark Office ("PTO")

 

 

14.8

 

 

 

190,546

 

 

 

2.8

%

 

 

5,088,926

 

 

 

2.3

%

Federal Emergency Management Agency ("FEMA")

 

 

18.5

 

 

 

210,373

 

 

 

3.1

%

 

 

4,607,609

 

 

 

2.1

%

Customs and Border Protection ("CBP")

 

 

11.0

 

 

 

68,000

 

 

 

1.0

%

 

 

3,764,804

 

 

 

1.7

%

Department of Transportation ("DOT")

 

 

4.1

 

 

 

129,659

 

 

 

1.9

%

 

 

3,730,211

 

 

 

1.7

%

Occupational Safety and Health Administration ("OSHA")

 

 

3.8

 

 

 

75,000

 

 

 

1.1

%

 

 

3,010,308

 

 

 

1.3

%

Defense Health Agency ("DHA")

 

 

14.1

 

 

 

101,285

 

 

 

1.5

%

 

 

2,307,291

 

 

 

1.0

%

Department of Energy ("DOE")

 

 

9.3

 

 

 

120,496

 

 

 

1.8

%

 

 

2,209,855

 

 

 

1.0

%

Military Entrance Processing Command ("MEPCOM")

 

 

5.5

 

 

 

30,000

 

 

 

0.4

%

 

 

2,204,619

 

 

 

1.0

%

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

 

 

2.5

 

 

 

73,031

 

 

 

1.1

%

 

 

2,131,557

 

 

 

1.0

%

National Park Service ("NPS")

 

 

4.2

 

 

 

62,772

 

 

 

0.9

%

 

 

1,767,746

 

 

 

0.8

%

U.S. Coast Guard ("USCG")

 

 

7.7

 

 

 

59,547

 

 

 

0.9

%

 

 

1,606,290

 

 

 

0.7

%

Small Business Administration ("SBA")

 

 

2.0

 

 

 

37,253

 

 

 

0.6

%

 

 

1,156,682

 

 

 

0.5

%

National Labor Relations Board ("NLRB")

 

 

5.5

 

 

 

36,640

 

 

 

0.5

%

 

 

1,086,935

 

 

 

0.5

%

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

 

 

4.9

 

 

 

39,320

 

 

 

0.6

%

 

 

1,075,525

 

 

 

0.5

%

National Oceanic and Atmospheric Administration ("NOAA")

 

 

0.8

 

 

 

25,612

 

 

 

0.4

%

 

 

834,548

 

 

 

0.4

%

     

 

 

 

 

 

 

17


Tenants (Cont.)

(As of March 31, 2020, unaudited)

 

 

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.)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

 

2.0

 

 

 

21,342

 

 

 

0.3

%

 

 

765,857

 

 

 

0.3

%

General Services Administration - Other

 

 

3.6

 

 

 

17,235

 

 

 

0.3

%

 

 

562,477

 

 

 

0.3

%

Bureau of Indian Affairs ("BIA")

 

 

3.4

 

 

 

6,477

 

 

 

0.1

%

 

 

217,628

 

 

 

0.1

%

U.S. Attorney Office ("USAO")

 

 

3.8

 

 

 

6,408

 

 

 

0.1

%

 

 

144,605

 

 

 

0.1

%

U.S. Marshals Service ("USMS")

 

 

6.8

 

 

 

1,054

 

 

 

0.0

%

 

 

47,752

 

 

 

0.0

%

Department of Labor ("DOL")

 

 

3.8

 

 

 

1,004

 

 

 

0.0

%

 

 

22,655

 

 

 

0.0

%

U.S. Probation Office ("USPO")

 

 

3.8

 

 

 

452

 

 

 

0.0

%

 

 

10,207

 

 

 

0.0

%

Subtotal

 

 

7.9

 

 

 

6,477,241

 

 

 

96.0

%

 

$

219,235,303

 

 

 

98.3

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Private Tenants

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other Private Tenants

 

 

2.1

 

 

 

50,794

 

 

 

0.8

%

 

$

1,465,169

 

 

 

0.7

%

Providence Health & Services

 

 

5.4

 

 

 

21,643

 

 

 

0.3

%

 

 

722,012

 

 

 

0.3

%

We Are Sharing Hope SC

 

 

1.5

 

 

 

21,609

 

 

 

0.3

%

 

 

621,681

 

 

 

0.3

%

United Technologies (Pratt & Whitney)

 

 

3.8

 

 

 

105,641

 

 

 

1.6

%

 

 

543,046

 

 

 

0.2

%

Lummus Corporation

 

 

8.3

 

 

 

70,078

 

 

 

1.0

%

 

 

409,602

 

 

 

0.2

%

Subtotal

 

 

4.6

 

 

 

269,765

 

 

 

4.0

%

 

$

3,761,510

 

 

 

1.7

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total / Weighted Average

 

 

7.7

 

 

 

6,747,006

 

 

 

100.0

%

 

$

222,996,813

 

 

 

100.0

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1)Weighted based on leased square feet.

 

18


Lease Expirations

(As of March 31, 2020, 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

 

2020

 

16

 

 

 

653,640

 

 

 

9.7

%

 

 

23,680,320

 

 

 

10.6

%

 

 

36.23

 

2021

 

13

 

 

 

855,544

 

 

 

12.7

%

 

 

25,472,245

 

 

 

11.4

%

 

 

29.77

 

2022

 

7

 

 

 

124,523

 

 

 

1.8

%

 

 

4,766,416

 

 

 

2.1

%

 

 

38.28

 

2023

 

10

 

 

 

291,498

 

 

 

4.3

%

 

 

8,168,804

 

 

 

3.7

%

 

 

28.02

 

2024

 

10

 

 

 

727,374

 

 

 

10.8

%

 

 

22,978,934

 

 

 

10.3

%

 

 

31.59

 

2025

 

10

 

 

 

350,956

 

 

 

5.2

%

 

 

12,278,633

 

 

 

5.5

%

 

 

34.99

 

2026

 

3

 

 

 

157,011

 

 

 

2.3

%

 

 

4,807,312

 

 

 

2.2

%

 

 

30.62

 

2027

 

6

 

 

 

495,529

 

 

 

7.3

%

 

 

17,442,638

 

 

 

7.8

%

 

 

35.20

 

2028

 

6

 

 

 

710,084

 

 

 

10.5

%

 

 

13,882,059

 

 

 

6.2

%

 

 

19.55

 

2029

 

4

 

 

 

417,682

 

 

 

6.2

%

 

 

11,160,509

 

 

 

5.0

%

 

 

26.72

 

Thereafter

 

20

 

 

 

1,963,165

 

 

 

29.2

%

 

 

78,358,943

 

 

 

35.2

%

 

 

39.91

 

Total / Weighted Average

 

105

 

 

 

6,747,006

 

 

 

100.0

%

 

$

222,996,813

 

 

 

100.0

%

 

$

33.05

 

 

HTML output is missing word chart. Please copy/paste the chart as a picture in source file

 

 

 

 

 

19


Summary of Re/Development Projects

(As of March 31, 2020, unaudited, in thousands, except square feet)

 

 

 

Projects Under Construction(1)

 

Property Name

 

Location

 

Property Type

 

Total Rentable Square Feet

 

 

Percentage Leased

 

 

Lease Term

 

Anticipated Total Cost

 

 

Cost to Date

 

 

Anticipated Lump-Sum Reimbursement(2)

 

 

Anticipated Completion Date

 

Anticipated Lease Commencement

 

FDA - Lenexa

 

Lenexa, KS

 

Laboratory

 

 

59,690

 

 

100%

 

 

20-Year

 

$

67,286

 

 

$

53,851

 

 

$

41,257

 

 

4Q 2020

 

4Q 2020

 

Total

 

 

 

 

 

 

59,690

 

 

 

 

 

 

 

 

$

67,286

 

 

$

53,851

 

 

$

41,257

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Projects in Design(3)

 

 

 

 

 

 

 

 

 

 

Property Name

 

Location

 

Property Type

 

Total Estimated Rentable Square Feet

 

 

Percentage Leased

 

 

Lease Term

 

Anticipated Completion Date

 

 

Anticipated Lease Commencement

 

 

 

 

 

 

 

 

 

 

FDA - Atlanta

 

Atlanta, GA

 

Laboratory

 

 

162,000

 

 

100%

 

 

20-Year

 

4Q 2022

 

 

4Q 2022

 

 

 

 

 

 

 

 

 

 

Total

 

 

 

 

 

 

162,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(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.

 

20