Core Viewpoint - Easterly Government Properties, Inc. is actively engaging with investors at the Jefferies Real Estate Conference 2025, indicating a focus on enhancing investor relations and showcasing its portfolio of Class A commercial properties leased to the U.S. Government [1] Company Overview - Easterly Government Properties, Inc. is a fully integrated real estate investment trust (REIT) that specializes in the acquisition, development, and management of Class A commercial properties [1] - The company primarily targets properties leased to the U.S. Government and its adjacent partners, highlighting its strategic focus on government-related real estate [1] Event Participation - Management from Easterly will participate in investor meetings at the Jefferies Real Estate Conference 2025, scheduled for November 19, 2025, in Miami, Florida [1] - This participation underscores the company's commitment to engaging with the investment community and potentially attracting new investors [1]

Core Viewpoint - Easterly Government Properties (DEA) has faced challenges, with its price performance influenced more by external factors than by its fundamental business performance [1] Company Analysis - The REIT's performance is characterized by significant noise in the market, which overshadows its underlying fundamentals [1] Investment Perspective - The article emphasizes the importance of conducting due diligence and understanding the quality of investments, particularly in the context of dividend-paying stocks and REITs [2]

Core Viewpoint - Easterly Government Properties (DEA) has faced challenges, with its price performance influenced more by external factors than by its fundamental performance [1] Company Summary - The REIT's performance is characterized by significant noise, indicating that market perceptions may not accurately reflect its underlying fundamentals [1]

Core Insights - During market turbulence, investors often seek dividend-yielding stocks, which typically have high free cash flows and offer substantial dividends [1] Group 1: Company Ratings and Analyst Insights - Park Hotels & Resorts Inc (NYSE:PK) has a dividend yield of 9.91%. UBS analyst Robin Farley maintained a Neutral rating and raised the price target from $10 to $11 on October 6, 2025, with an accuracy rate of 79%. Truist Securities analyst Patrick Scholes downgraded the stock from Buy to Hold and cut the price target from $16 to $11 on May 30, 2025, with an accuracy rate of 65% [7] - RLJ Lodging Trust (NYSE:RLJ) has a dividend yield of 8.75%. Truist Securities analyst Gregory Miller maintained a Hold rating and raised the price target from $7 to $8 on September 5, 2025, with an accuracy rate of 67%. Keybanc analyst Austin Wurschmidt maintained an Overweight rating but reduced the price target from $14 to $12 on March 24, 2025, with an accuracy rate of 60% [7] - Easterly Government Properties Inc (NYSE:DEA) has a dividend yield of 8.37%. Jefferies analyst Joe Dickstein downgraded the stock from Buy to Hold and cut the price target from $26 to $20 on October 13, 2025, with an accuracy rate of 65%. RBC Capital analyst Michael Carroll maintained an Underperform rating and reduced the price target from $27.5 to $22 on June 2, 2025, with an accuracy rate of 60% [7]

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 Analysis - The company provides a yield of 8% through its leasing agreements with the US Government, which is a significant attraction for investors [1] - The stock's recent performance indicates potential concerns or market reactions that may need further investigation to understand the underlying causes of the decline [1] Industry Context - The broader context of the real estate investment trust (REIT) sector, particularly those focused on government leasing, may influence investor sentiment and stock performance [1]

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].

Financial Performance - Total revenues for the nine months ended September 30, 2025, increased to $249,060,000, up from $223,802,000 in the same period of 2024, representing an increase of 11.3%[10] - Rental income for the three months ended September 30, 2025, was $82,210,000, compared to $72,536,000 for the same period in 2024, reflecting a growth of 13.5%[10] - Net income available to Easterly Government Properties, Inc. for the nine months ended September 30, 2025, was $8,411,000, down from $14,100,000 in the same period of 2024, a decrease of 40.0%[10] - Comprehensive income attributable to Easterly Government Properties, Inc. for the three months ended September 30, 2025, was $1,163,000, compared to $3,008,000 for the same period in 2024, a decrease of 61.2%[13] - For the nine months ended September 30, 2025, net income was $8,784,000, a decrease from $14,849,000 in 2024, representing a decline of approximately 41.5%[15] - For the three months ended September 30, 2025, the company reported a net income of $1,247 thousand, compared to a net income of $5,115 thousand for the same period in 2024[71] Assets and Liabilities - Total assets as of September 30, 2025, amounted to $3,381,429,000, an increase from $3,223,071,000 as of December 31, 2024, marking a growth of 4.9%[8] - The company reported a total liabilities figure of $1,996,606,000 as of September 30, 2025, compared to $1,835,954,000 as of December 31, 2024, indicating an increase of 8.8%[8] - The total stockholders' equity as of September 30, 2025, was $1,384,823,000, slightly down from $1,387,117,000 as of December 31, 2024[8] - Total debt as of September 30, 2025, was $1,638.8 million, with a significant portion consisting of various senior notes and term loan facilities[43] Cash Flow - Net cash provided by operating activities increased to $217,263,000 in 2025 from $138,082,000 in 2024, reflecting a growth of approximately 57.3%[15] - The company’s cash and cash equivalents decreased to $4,355,000 as of September 30, 2025, from $19,353,000 as of December 31, 2024, a decline of 77.5%[8] - Total cash and cash equivalents and restricted cash at the end of the period decreased to $14,209,000 in 2025 from $39,207,000 in 2024, a decline of approximately 63.7%[16] Dividends and Stock Issuance - The company declared dividends of $0.45 per common share for the three months ended September 30, 2025, down from $0.66 per share in the same period of 2024[10] - The company issued common shares worth $63,620,000 in 2025, compared to $43,414,000 in 2024, reflecting an increase of approximately 46.5%[15] - The company issued 2,466,987 shares of common stock, netting $62,891 thousand during the nine months ended September 30, 2025[72] Real Estate Operations - The company owned 92 operating properties and had a total leased area of approximately 10.2 million square feet, with an occupancy rate of 97% as of September 30, 2025[21] - Real estate acquisitions and deposits amounted to $179,429,000 in 2025, significantly higher than $73,464,000 in 2024, indicating an increase of approximately 144.5%[15] - The U.S. Government accounted for approximately 88.0% of total annualized lease income as of September 30, 2025, highlighting a significant concentration in government tenants[95] Impairment and Losses - The company reported an impairment loss of $2,545,000 for the nine months ended September 30, 2025, with no impairment loss reported in the same period of 2024[10] - The company sold the ICE - Otay office building for net proceeds of approximately $3.5 million, resulting in an impairment loss of $2.5 million due to remeasurement[35] - The unrealized loss on treasury locks and interest rate swaps for the nine months ended September 30, 2025, was $5,536 thousand[72] Stock-Based Compensation - Stock-based compensation expense for the three months ended September 30, 2025, was $1.6 million, compared to a loss of $0.2 million in 2024[62] - The company experienced a stock-based compensation expense of $4,449 thousand for the nine months ended September 30, 2025[72] Other Financial Metrics - The company recognized asset management income of $1.9 million for the nine months ended September 30, 2025, compared to $1.7 million in the same period of 2024, indicating a growth of approximately 11.8%[10] - The company recognized interest income of $0.8 million and $2.5 million from real estate loan receivables during the three and nine months ended September 30, 2025, respectively[41] - The company incurred $1.0 million in acquisition-related expenses during the nine months ended September 30, 2025[34] Subsequent Events - The company had no significant subsequent events noted after evaluating events following September 30, 2025[105]

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]