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]