Core Viewpoint - Easterly Government Properties (NYSE: DEA) has experienced a decline of approximately 6% since the initial coverage, despite offering a solid 8% yield from leasing to the US Government [1] Company Research - The analyst has over 10 years of experience researching companies across various sectors, including commodities and technology, which contributes to the depth of analysis provided [2] - The focus has shifted to a value investing-oriented YouTube channel, where extensive research on hundreds of companies has been conducted, with a particular interest in metals and mining stocks [2] Investment Position - The analyst currently holds no stock or derivative positions in any mentioned companies but may consider initiating a long position in DEA within the next 72 hours [3]

Core Viewpoint - Easterly Government Properties, Inc. (NYSE: DEA) is identified as a compelling investment opportunity with a "strong buy" rating due to its undervalued status and potential for decent to high upside [1]. Group 1: Investment Thesis - The analysis emphasizes the importance of focusing on risk and reward when identifying promising stocks [1]. - The belief is that the best investment ideas are often the simplest, and a contrarian approach can yield better results [1]. Group 2: Market Position - The company is positioned in a niche market that may offer limited risks while providing significant upside potential [1].

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 September 30, 2025 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) (State of Incorporation) (IRS Employ ...

Financial Data and Key Metrics Changes - For Q3 2025, net income per share was $0.03, and core FFO per share grew to $0.76, slightly above expectations [11] - Cash available for distribution was $29.3 million, reflecting steady operational performance [11] - Core FFO growth from 2024 to the midpoint of 2025 was reported at 3%, driven by acquisitions and strong renewal execution [7][11] Business Line Data and Key Metrics Changes - The company maintained high portfolio occupancy at 97% and a weighted average lease term of approximately 10 years, indicating strong tenancy durability [7] - Recent acquisition of York Space Systems headquarters in Colorado aligns with the goal of 15% government-adjacent exposure [8] - The development pipeline remains active, with major projects like the FDA Atlanta nearing completion, expected to enhance earnings [12] Market Data and Key Metrics Changes - The company is focused on diversifying its portfolio with a goal of 70% federal exposure, 15% state and local, and 15% adjacent space [54] - The acquisition of properties like DC Plaza and DHS Burlington demonstrates the strategy to grow state and local exposure while maintaining high-credit government properties [54] Company Strategy and Development Direction - The company’s growth strategy is centered on three long-term priorities: growing core FFO by 2%-3% annually, increasing same-store performance, and executing value-creating development opportunities [5][10] - The strategy aims to balance growth and durability, ensuring consistent performance regardless of economic conditions [6] - The company is targeting a medium-term cash leverage goal of six times, down from historical levels of seven to eight times, to enhance investor comparability [9] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence that the federal government will not default on leases, despite ongoing budget negotiations and shutdowns [4] - The company remains optimistic about its ability to deliver consistent growth, supported by a robust acquisition pipeline and strong tenant relationships [10][11] - Management acknowledged the challenges posed by the current cost of capital but emphasized the potential for mean reversion as the company continues to deliver on growth targets [25][60] Other Important Information - The company has made significant progress in reducing cash leverage, with expectations to improve further upon project completions [12][13] - The recent acquisition of York Space Systems was priced at $29 million with a cap rate in the low 11%, reflecting strong fundamentals in the Denver market [49] - The company is exploring modern lease structures with the GSA, indicating a shift towards more competitive leasing practices [55] Q&A Session Summary Question: Update on Flagstaff Courthouse completion - Management indicated that the completion date was pushed out due to ongoing design work involving multiple agencies, with a new achievable date set for 2026 [17] Question: Thoughts on capital allocation and funding sources - Management discussed the cost of equity and the potential for partnerships with sovereign wealth funds to optimize capital allocation [18][20] Question: Acquisition guidance for 2026 - Management clarified that the $50 million acquisition guidance for 2026 is a conservative target, reflecting confidence in the pipeline and growth potential [24][26] Question: Impact of dispositions on leverage targets - Management noted that dispositions may require favorable interest rates to effectively reduce leverage, while still pursuing acquisitions [27][29] Question: Effects of government shutdown on operations - Management acknowledged that shutdowns slow operations but do not threaten the value of the portfolio, emphasizing the government's commitment to meet obligations [30][31] Question: Strategy shift from higher leverage to lower leverage - Management explained that the focus is on achieving lower leverage with moderate growth to improve cost of capital, while still aiming for consistent growth [60][64] Question: 2026 guidance and expected growth - Management provided insights into the 2026 guidance, highlighting that growth will primarily come from the FDA Atlanta project and same-store growth, with no expected dispositions [71][73]

Financial Data and Key Metrics Changes - For the third quarter, net income per share was reported at $0.03, while core FFO per share grew to $0.76, slightly above expectations [11] - Cash available for distribution was $29.3 million, reflecting steady operational performance [11] - Core FFO growth from 2024 to the midpoint of the 2025 guidance range was 3%, driven by acquisitions and strong renewal execution [7][11] Business Line Data and Key Metrics Changes - The company maintained high portfolio occupancy at 97% and a weighted average lease term of approximately 10 years, indicating strong tenancy durability [7] - The recent acquisition of York Space Systems headquarters in Colorado aligns with the goal of achieving 15% government-adjacent exposure [8] - The development pipeline remains active, with major projects like the FDA Atlanta nearing completion, expected to enhance earnings [12] Market Data and Key Metrics Changes - The company aims to diversify its portfolio with a target of 70% federal exposure, 15% state and local, and 15% in adjacent spaces [54] - The acquisition of properties like DC Plaza and DHS Burlington demonstrates the strategy to grow state and local exposure while maintaining high-credit government properties [54] Company Strategy and Development Direction - The company is focused on a disciplined growth strategy centered on three long-term priorities: growing core FFO by 2-3% annually, increasing same-store performance, and executing value-creating development opportunities [5][10] - The strategy aims to balance growth and durability, ensuring consistent performance regardless of economic conditions [6] - The company is targeting a medium-term cash leverage goal of six times, down from historical levels of seven to eight times, to enhance investor comparability [9] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence that the government will not default on leases, despite the ongoing federal government shutdown [4] - The company remains optimistic about its growth trajectory, with expectations of achieving 2-3% annual core FFO growth and potential upside [14][60] - Management highlighted the importance of maintaining strong relationships with government agencies and the potential for modernizing lease structures with the GSA [55] Other Important Information - The company has successfully extended leases at key properties, including USCIS Lincoln and VA Golden, indicating strong tenant relationships [11] - The FDA Atlanta project is expected to significantly contribute to earnings growth, with a large portion of the anticipated increase in 2026 coming from this development [71] Q&A Session Summary Question: What is happening with the Flagstaff Courthouse completion? - The completion date has been pushed out two quarters due to the government balancing multiple agency designs, but the new date is considered achievable [17] Question: Can you discuss your overall thoughts on capital allocation and funding sources for development? - The company is focused on optimizing its cost of equity and exploring partnerships with sovereign wealth funds to enhance funding opportunities [20][21] Question: What are the headwinds affecting the $50 million acquisition guidance for 2026? - The guidance is conservative to reflect the current cost of capital, but the company expects to achieve this target given its strong acquisition pipeline [25][26] Question: Will dispositions be part of achieving the leverage target? - Dispositions may be necessary, but the company believes it can achieve its leverage goals through careful management of acquisitions and development projects [28] Question: How does the government shutdown impact operations? - While the shutdown slows down processes, management believes it will not diminish the portfolio's value, and the government will continue to meet its obligations [30][76] Question: Can you clarify the 2026 guidance and any expected dispositions? - There are no dispositions expected for 2026, and the guidance reflects growth primarily from the FDA Atlanta project and same-store growth [73]

Financial Data and Key Metrics Changes - For Q3 2025, net income per share was $0.03 and core FFO per share grew to $0.76, slightly above expectations [16] - Cash available for distribution was $29.3 million, reflecting steady operational performance [16] - Core FFO growth from 2024 to the midpoint of guidance for 2025 was reported at 3% [10] Business Line Data and Key Metrics Changes - The portfolio occupancy remained near historical highs at 97% with a weighted average lease term of approximately ten years [10] - The recent acquisition of York Space Systems headquarters in Colorado aligns with the goal of 15% government-adjacent exposure [11] Market Data and Key Metrics Changes - The company continues to maintain strong relationships across agencies and has refined its balance sheet with a disciplined approach to capital deployment [10] - The development pipeline remains active, with major projects progressing, including the FDA Atlanta project nearing completion [18] Company Strategy and Development Direction - The company is focused on three long-term priorities: growing core FFO by 2% to 3% annually, increasing same-store performance through diversification, and executing value-creating development opportunities [7] - The strategy aims to balance growth and durability, ensuring consistent performance regardless of economic or policy changes [7] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence that the government will not default on leases, viewing shutdowns as part of budget negotiations [5] - The company is optimistic about its growth strategy and the opportunities ahead, emphasizing the importance of mission-critical facilities [14] Other Important Information - The company is targeting a medium-term cash leverage goal of six times, down from historical levels of seven to eight times [13] - The acquisition team has built a robust pipeline, allowing for selective capital deployment [12] Q&A Session Summary Question: Update on Flagstaff warehouse completion - The completion has been pushed out two quarters due to ongoing design work by the government, but the new date is considered achievable [24] Question: Thoughts on capital allocation and funding sources - The company is focused on cost of equity and believes it can develop at a spread above its cost of capital, with strong relationships with sovereign wealth funds [25][27] Question: Acquisition guidance for 2026 - The $50 million acquisition guidance is set low to manage expectations, with a strong pipeline of $1.5 billion identified [31][34] Question: Impact of government shutdown on leasing - The shutdown slows processes but does not diminish portfolio value, with agencies continuing to work effectively [40][42] Question: Achieving six times cash flow leverage - The company plans to leverage attractive development projects and joint ventures to reach its leverage target [46][50] Question: Changes in growth strategy - The focus has shifted to lower leverage with moderate growth to improve cost of capital, while still aiming for 2% to 3% growth [69][76] Question: 2026 guidance and headwinds - The guidance reflects growth from FDA Atlanta and same-store growth, offset by increased G&A expenses [81][84] Question: Government shutdown and lease funding - All leases are funded for six months, and the company expects the government to meet its obligations despite shutdowns [86][88]

Financial Data and Key Metrics Changes - For Q3 2025, net income per share was $0.03, and core FFO per share grew to $0.76, slightly above expectations [11] - Cash available for distribution was $29.3 million, reflecting steady operational performance [11] - Core FFO growth from 2024 to the midpoint of guidance for 2025 was 3%, driven by acquisitions and strong renewal execution [7][11] Business Line Data and Key Metrics Changes - The company maintained high portfolio occupancy at 97% and a weighted average lease term of approximately 10 years, indicating strong tenancy durability [7] - Recent acquisition of York Space Systems headquarters in Colorado aligns with the goal of 15% government-adjacent exposure [8] Market Data and Key Metrics Changes - The company is focused on diversifying its portfolio with state and local government leases, which can extend lease terms up to 40 years, enhancing weighted average lease term [12] - The development pipeline remains active, with major projects like the FDA Atlanta nearing completion, expected to drive future earnings growth [12][67] Company Strategy and Development Direction - The company’s growth strategy is centered on three long-term priorities: growing core FFO by 2-3% annually, increasing same-store performance through diversification, and executing value-creating development opportunities [5] - The company aims to improve its cost of capital through leverage optimization, targeting a medium-term cash leverage goal of six times, down from historical levels of seven to eight times [9] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence that the government will not default on leases despite the ongoing federal government shutdown, viewing it as a negotiating tool rather than a threat [4][73] - The company remains optimistic about its growth trajectory, with a focus on delivering essential real estate that supports government operations [10][77] Other Important Information - The company has successfully extended leases at key properties, including USCIS Lincoln and VA Golden, and continues to find the government a constructive partner [11] - The company’s guidance for full-year core FFO per share for 2025 is narrowed to a range of $2.98 to $3.02, consistent with its growth objectives [14] Q&A Session Summary Question: What is the status of the Flagstaff Courthouse completion? - The completion date has been pushed out two quarters due to ongoing design work involving multiple agencies, but the new date is considered achievable [18] Question: Can you discuss your thoughts on capital allocation and funding sources for development? - The company is exploring various funding sources, including partnerships with sovereign wealth funds, to optimize capital allocation while managing costs [19][22] Question: What is the reasoning behind the $50 million acquisition guidance for 2026? - The guidance reflects a conservative approach amid cost of capital challenges, but the company expects to identify opportunities within its $1.5 billion pipeline [25][27] Question: Will dispositions be part of achieving your leverage target? - Dispositions may be considered, but the company believes it can achieve its leverage goals through acquisitions and partnerships without needing to sell assets [28][29] Question: How does the government shutdown affect leasing and agency operations? - While the shutdown may slow processes, it does not threaten the value of the portfolio, and the company expects a quick catch-up once operations resume [30][31] Question: Can you elaborate on the strategy for achieving six times cash flow leverage? - The company plans to leverage development projects effectively while maintaining a focus on growth, aiming for a gradual reduction in leverage over the next few years [33][36] Question: What are the expectations for 2026 guidance and potential headwinds? - The 2026 guidance reflects growth primarily from the FDA Atlanta project, with expectations for same-store growth offset by increased G&A expenses [67][70]

Easterly Government Properties (NYSE:DEA) stock fell 3.1% in Monday late morning trading after the owner of buildings leased to the federal government issued 2026 guidance that mostly fell short of the consensus estimate. The owner of buildings leased to the ...

Financial Performance - Net income available to Easterly Government Properties, Inc was $1213 thousand for the three months ended September 30, 2025, compared to $4863 thousand for the same period in 2024[20] - Funds From Operations (FFO) was $34769 thousand for the three months ended September 30, 2025, compared to $30634 thousand for the same period in 2024[20] - Core FFO was $35623 thousand for the three months ended September 30, 2025, compared to $32172 thousand for the same period in 2024[20] - Cash Available for Distribution (CAD) was $29300 thousand for the three months ended September 30, 2025, compared to $25102 thousand for the same period in 2024[20] Balance Sheet - Total assets were $3381429 thousand as of September 30, 2025, compared to $3223071 thousand as of December 31, 2024[21] - Net Debt was $1642281 thousand as of September 30, 2025[20] - Adjusted Net Debt was $1585379 thousand as of September 30, 2025[34] Debt and Leverage - Net debt to total enterprise value was 599% as of September 30, 2025[20] - Cash interest coverage ratio was 30x as of September 30, 2025[20] - Total unsecured debt was $1495900 thousand, representing 908% of total indebtedness as of September 30, 2025[29]

Core Viewpoint - Easterly Government Properties (DEA) reported quarterly funds from operations (FFO) of $0.76 per share, matching the Zacks Consensus Estimate and showing a slight increase from $0.75 per share a year ago [1] Financial Performance - The company posted revenues of $86.15 million for the quarter ended September 2025, exceeding the Zacks Consensus Estimate by 0.88% and up from $74.78 million year-over-year [2] - Over the last four quarters, Easterly Government Properties has not surpassed consensus FFO estimates, but it has topped consensus revenue estimates twice [2] Stock Performance - Shares of Easterly Government Properties have declined approximately 20.8% since the beginning of the year, contrasting with the S&P 500's gain of 15.5% [3] - The stock's immediate price movement will largely depend on management's commentary during the earnings call [3] Future Outlook - The current consensus FFO estimate for the upcoming quarter is $0.77 on revenues of $88 million, and for the current fiscal year, it is $3.00 on revenues of $336.31 million [7] - The estimate revisions trend for Easterly Government Properties was favorable ahead of the earnings release, resulting in a Zacks Rank 2 (Buy) for the stock, indicating expected outperformance in the near future [6] Industry Context - The REIT and Equity Trust - Other industry, to which Easterly Government Properties belongs, is currently ranked in the top 28% of over 250 Zacks industries, suggesting a favorable outlook for stocks in this sector [8]