Easterly Government Properties, Inc. (NYSE:DEA) Q1 2022 Earnings Conference Call May 3, 2022 11:00 AM ET Company Participants Lindsay Winterhalter - Supervisory VP, IR & Operations Darrell Crate - Executive Chairman William Trimble - President, CEO & Director Meghan Baivier - EVP, CFO & COO Conference Call Participants Michael Carroll - RBC Capital Markets Michael Griffin - Citigroup Inc. Operator Greetings. Welcome to Easterly Government Properties First Quarter 2022 Earnings Conference Call. [Operator Ins ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2022 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file number: 001-36834 EASTERLY GOVERNMENT PROPERTIES, INC. (Exact Name of Registrant as Specified in Its Charter) Maryland 47-2047728 (State of Incorporat ...

Easterly Government Property Inc. (NYSE:DEA) Q4 2021 Earnings Conference Call February 28, 2022 10:00 AM ET Company Participants Bill Trimble – Chief Executive Officer Meghan Baivier – Chief Financial Officer and Chief Operating Officer Lindsay Winterhalter – Vice President, Investor Relations Darrell Crate – Chairman Conference Call Participants John Kim – BMO Capital Markets Michael Carroll – RBC Capital Markets Emmanuel Korchman – Citi Operator Greetings, welcome to the Easterly Government Properties, Fo ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-K ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Fiscal Year Ended: December 31, 2021 ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 OR For the transition period from To Commission File Number: 001-36834 EASTERLY GOVERNMENT PROPERTIES, INC. (Exact name of registrant as specified in its charter) | --- | --- | --- | --- | |----------------- ...

Financial Data and Key Metrics Changes - Net income per share on a fully diluted basis was $0.09, FFO per share was $0.33, and FFO as adjusted per share was $0.31 [34] - Cash available for distribution was $26.1 million, with total indebtedness of approximately $1 billion [34][37] - The weighted average age of the portfolio was 13.8 years, and the weighted average remaining lease term was 8.9 years [35] Business Line Data and Key Metrics Changes - The company has acquired 10 properties year-to-date for a total pro rata contractual purchase price of approximately $321.3 million, exceeding its increased acquisition volume target for the year [25] - The weighted average remaining lease term is expected to grow nearly 16% from 8.9 years to 10.3 years through the acquisition of the VA portfolio [20] Market Data and Key Metrics Changes - The company has positioned itself to achieve an acquisition target range of $200 million to $300 million for 2022, with a significant pipeline of actionable opportunities [27] - The universe of global investors sees value in these assets at a sub-5% cap rate, indicating strong market interest [15] Company Strategy and Development Direction - The company has increased its acquisition guidance for 2021 to $350 million, representing a 75% increase from the original target [8] - A new joint venture with a leading global investor has been formed to enhance acquisition capabilities and access to larger assets [46] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the acquisition pipeline and the ability to deliver consistent growth to shareholders, maintaining a steady dividend yield of 5% [49][51] - The company is focused on acquiring young buildings and renewing existing assets for long lease durations, which are core to its strategy [36] Other Important Information - The company has entered into a sustainability-linked pricing component in its credit facility, which can improve pricing based on sustainability performance [41] - The company has executed a public offering of 6.3 million shares at a net price of $21.64 per share to fund its acquisition pipeline [42] Q&A Session Summary Question: Can you quantify how much of the acquisition guidance for 2022 is contractual under the JV versus new targeted acquisitions? - The guidance assumes $50 million of pro rata acquisition volume falls into next year, with $250 million of fresh acquisitions targeted [53] Question: How much of the joint venture do you still have to close? - Approximately $300 million of the share still needs to close within that portfolio, with most expected to close in 2022 [57] Question: What are your expectations for cap rates in 2022? - The expectation is that cap rates will continue to trend down, with opportunities ranging from 5% to north of 6% [70] Question: How do you plan on growing the joint venture? - The company anticipates larger portfolio deals will be put in the joint venture, while smaller transactions will be completed on the balance sheet [61] Question: Can you comment on the inflationary impact on operating expenses? - The company has a tenant reimbursement line item that offsets operating expenses, and it feels insulated from inflation due to lease structures [68]

Part I: Financial Information [Financial Statements](index=2&type=section&id=Item%201%3A%20Financial%20Statements) This section presents the unaudited consolidated financial statements for the three and nine months ended September 30, 2021, detailing the Balance Sheets, Statements of Operations, Comprehensive Income, and Cash Flows [Consolidated Balance Sheets](index=3&type=section&id=Consolidated%20Balance%20Sheets) As of September 30, 2021, total assets were $2.56 billion, an increase from $2.46 billion at year-end 2020, with total liabilities rising to $1.19 billion and total equity increasing to $1.37 billion Consolidated Balance Sheet Highlights (in thousands) | Account | September 30, 2021 | December 31, 2020 | | :--- | :--- | :--- | | **Total Assets** | **$2,555,970** | **$2,457,540** | | Real estate properties, net | $2,287,208 | $2,208,661 | | Cash and cash equivalents | $16,068 | $8,465 | | **Total Liabilities** | **$1,185,260** | **$1,157,570** | | Revolving credit facility | $112,500 | $79,250 | | Notes payable, net | $447,215 | $447,171 | | **Total Equity** | **$1,370,710** | **$1,299,970** | [Consolidated Statements of Operations](index=4&type=section&id=Consolidated%20Statements%20of%20Operations) For the nine months ended September 30, 2021, total revenues increased 13.0% year-over-year to $203.2 million, with net income more than doubling to $26.2 million and diluted EPS reaching $0.27 Statement of Operations Highlights (in thousands, except per share data) | Metric | Three Months Ended Sep 30, 2021 | Three Months Ended Sep 30, 2020 | Nine Months Ended Sep 30, 2021 | Nine Months Ended Sep 30, 2020 | | :--- | :--- | :--- | :--- | :--- | | Total Revenues | $69,608 | $61,131 | $203,223 | $179,875 | | Total Expenses | $51,990 | $47,682 | $150,615 | $142,438 | | Net Income | $9,042 | $4,821 | $26,176 | $10,902 | | Diluted EPS | $0.09 | $0.05 | $0.27 | $0.12 | | Dividends Declared per Share | $0.265 | $0.260 | $0.785 | $0.780 | [Consolidated Statements of Comprehensive Income](index=5&type=section&id=Consolidated%20Statements%20of%20Comprehensive%20Income) Comprehensive income for the nine months ended September 30, 2021, was $30.5 million, a substantial increase from $2.0 million in the prior year, driven by higher net income and positive changes in unrealized gains on interest rate swaps Comprehensive Income (in thousands) | Metric | Nine Months Ended Sep 30, 2021 | Nine Months Ended Sep 30, 2020 | | :--- | :--- | :--- | | Net Income | $26,176 | $10,902 | | Unrealized gain (loss) on interest rate swaps, net | $4,275 | $(8,880) | | **Comprehensive Income** | **$30,451** | **$2,022** | [Consolidated Statements of Cash Flows](index=6&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) For the nine months ended September 30, 2021, net cash from operating activities was $94.5 million, while net cash used in investing activities was $127.5 million, primarily for real estate acquisitions, and net cash provided by financing activities was $42.1 million Cash Flow Summary (in thousands) | Activity | Nine Months Ended Sep 30, 2021 | Nine Months Ended Sep 30, 2020 | | :--- | :--- | :--- | | Net cash provided by operating activities | $94,459 | $108,625 | | Net cash used in investing activities | $(127,452) | $(181,316) | | Net cash provided by financing activities | $42,072 | $71,016 | | **Net increase (decrease) in Cash** | **$9,079** | **$(1,675)** | [Notes to the Consolidated Financial Statements](index=8&type=section&id=Notes%20to%20the%20Consolidated%20Financial%20Statements) The notes provide detailed disclosures on accounting policies, real estate acquisitions and dispositions, debt structure, equity transactions, and subsequent events - The company is a REIT focused on leasing Class A commercial properties to U.S. Government agencies, owning **83 operating properties** (**7.5M sq ft**) and one property under development as of Sep 30, 2021[23](index=23&type=chunk)[24](index=24&type=chunk) - During the first nine months of 2021, the company acquired **six operating properties** for an aggregate purchase price of **$134.0 million**[32](index=32&type=chunk) - The company sold **two properties**, SSA – Mission Viejo and United Technologies – Midland, for net proceeds of **$3.3 million** and **$4.0 million** respectively, recognizing a total gain of **$1.3 million**[35](index=35&type=chunk)[36](index=36&type=chunk) - Subsequent to the quarter-end, the company formed a joint venture to acquire a portfolio of **ten VA properties** for **$635.6 million** and also acquired **two other properties**[103](index=103&type=chunk)[104](index=104&type=chunk)[105](index=105&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=24&type=section&id=Item%202%3A%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the company's financial condition and results of operations, focusing on its U.S. Government-leased property portfolio, liquidity, and reconciliation of Net Income to non-GAAP FFO - The company's portfolio consists of **83 operating properties**, which are **99% leased**, with U.S. Government tenants accounting for **98.6%** of the company's annualized lease income[114](index=114&type=chunk)[121](index=121&type=chunk) Results of Operations (Nine Months Ended Sep 30) | Metric | 2021 | 2020 | Change | | :--- | :--- | :--- | :--- | | Total Revenues | $203.2M | $179.9M | +$23.3M | | Total Expenses | $150.6M | $142.4M | +$8.2M | | Net Income | $26.2M | $10.9M | +$15.3M | FFO Reconciliation (Nine Months Ended Sep 30) | Metric (in thousands) | 2021 | 2020 | | :--- | :--- | :--- | | FFO | $92,430 | $81,634 | | FFO, as Adjusted | $86,676 | $78,698 | - The company maintains liquidity through cash, operating cash flow, its revolving credit facility (**$337.5 million available** as of Sep 30, 2021), and equity/debt issuances[172](index=172&type=chunk)[173](index=173&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=42&type=section&id=Item%203%3A%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company's primary market risk is interest rate risk on its variable-rate debt, with 87.4% of its debt fixed-rate as of September 30, 2021, and ongoing monitoring of the LIBOR to SOFR transition - As of Sep 30, 2021, **87.4%** of the company's debt was fixed-rate, with **$128.2 million** (**12.6%**) subject to variable rates[220](index=220&type=chunk) - A **25 basis point** fluctuation in market interest rates would change annual interest expense by **$0.3 million**[220](index=220&type=chunk) - The company is monitoring the planned phase-out of LIBOR after June 30, 2023, and its transition to alternative rates like SOFR[221](index=221&type=chunk) [Controls and Procedures](index=42&type=section&id=Item%204%3A%20Controls%20and%20Procedures) Management, including the CEO and CFO, concluded that the company's disclosure controls and procedures were effective as of September 30, 2021, with no material changes to internal control over financial reporting during the quarter - The CEO and CFO concluded that disclosure controls and procedures were **effective** as of September 30, 2021[222](index=222&type=chunk) - No material changes were identified in the internal control over financial reporting during the third quarter of 2021[223](index=223&type=chunk) Part II: Other Information [Legal Proceedings](index=43&type=section&id=Item%201%3A%20Legal%20Proceedings) The company reports that it is not currently involved in any material litigation, nor is it aware of any threatened material litigation - The company is not currently involved in any material legal proceedings[225](index=225&type=chunk) [Risk Factors](index=43&type=section&id=Item%201A%3A%20Risk%20Factors) The report states there are no material changes to the risk factors disclosed in the 2020 Annual Report on Form 10-K, except for an updated risk factor concerning joint ventures - A new risk factor was added regarding joint ventures, citing risks like partner financial distress, inconsistent goals, and potential impasses on key decisions[227](index=227&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=43&type=section&id=Item%202%3A%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company reported no unregistered sales of equity securities or use of proceeds during the period - None reported[228](index=228&type=chunk) [Defaults Upon Senior Securities](index=43&type=section&id=Item%203%3A%20Defaults%20Upon%20Senior%20Securities) The company reports that this item is not applicable - Not applicable[229](index=229&type=chunk) [Mine Safety Disclosures](index=43&type=section&id=Item%204%3A%20Mine%20Safety%20Disclosures) The company reports that this item is not applicable - Not applicable[230](index=230&type=chunk) [Other Information](index=43&type=section&id=Item%205%3A%20Other%20Information) The company reported no other information for this item - None[231](index=231&type=chunk) [Exhibits](index=44&type=section&id=Item%206%3A%20Exhibits) This section lists the exhibits filed with the Form 10-Q, including amended credit agreements, a purchase and sale agreement, and officer certifications required by the SEC - Lists exhibits filed with the report, such as credit agreements, a major purchase agreement, and officer certifications[233](index=233&type=chunk)

Financial Data and Key Metrics Changes - The company reported a net income per share of $0.10 and FFO per share of $0.33 for Q2 2021, with adjusted FFO per share at $0.31 and cash available for distribution at $23.2 million [28] - The total indebtedness at quarter-end was approximately $1 billion, with a net debt to total enterprise value of 33.9% and an adjusted net debt to annualized quarterly pro forma EBITDA ratio of 6.2 times [29][30] Business Line Data and Key Metrics Changes - The company owns 84 properties across 39 tenant agencies, with an average building age of 13.4 years and an average lease duration of 8.6 years [8][25] - Year-to-date, the company has acquired six properties totaling $134 million, increasing its 2021 FFO guidance per share on a fully diluted basis [18][37] Market Data and Key Metrics Changes - The company has executed on 45% of its enhanced acquisition guidance of $300 million for the year, indicating a robust acquisition pipeline, particularly in the VA market [19][20] - The company anticipates growth in cash flow, with a dividend yield of approximately 5%, representing a spread of over 370 basis points above the treasury [10][37] Company Strategy and Development Direction - The company is focused on acquiring mission-critical properties, with a strong emphasis on facilities that support essential government functions [12][14] - The company plans to increase its acquisition volume target by 50% for the year, from $200 million to $300 million, reflecting confidence in its acquisition pipeline [18][19] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the second half of the year, citing a strong acquisition pipeline and the ability to generate cash flow that can outpace FFO growth [11][39] - The company believes it has emerged from COVID-19 stronger, with a diversified portfolio and actionable acquisition opportunities exceeding pre-pandemic levels [7][11] Other Important Information - The company has made significant progress in its debt capital markets activities, including a note purchase agreement to issue up to $250 million in fixed-rate senior unsecured notes [30][31] - The company has implemented a sustainability-linked pricing component in its amended credit facility, which could improve pricing based on achieving certain sustainability performance targets [34][35] Q&A Session Summary Question: Acquisition market competition and pricing impact - Management noted an increase in acquisition opportunities but did not observe new competitors entering the market, maintaining a competitive edge due to better cost of capital [40][41] Question: Future property sales and portfolio repositioning - Management indicated that while there may be occasional strategic sales, the focus remains on maintaining a strong portfolio of mission-critical properties [43][44] Question: Opportunities with specific agencies - Management highlighted ongoing opportunities with the FDA and VA, emphasizing the potential for new outpatient facilities and mission-critical properties [48][49]

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2021 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from To Commission file number 001-36834 EASTERLY GOVERNMENT PROPERTIES, INC. (Exact Name of Registrant as Specified in Its Charter) Maryland 47-2047728 (State of Incorporatio ...

Easterly Government Properties, Inc. (NYSE:DEA) Q1 2021 Earnings Conference Call May 4, 2021 10:00 AM ET Company Participants Lindsay Winterhalter – Vice President-Investor Relations Darrell Crate – Chairman Bill Trimble – Chief Executive Officer Meghan Baivier – Chief Financial and Operating Officer Conference Call Participants Michael Carroll – RBC Capital Markets Merrill Ross – Compass Point Frank Lee – BMO Operator Greetings, welcome to the Easterly Government Properties First Quarter 2021 Earnings Conf ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2021 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from To Commission file number 001-36834 EASTERLY GOVERNMENT PROPERTIES, INC. (Exact Name of Registrant as Specified in Its Charter) Maryland 47-2047728 (State of Incorporati ...