As we enter 2026, our strategic priorities remain unchanged and continue to guide our approach to disciplined growth and portfolio enhancement. One, core FFO growth per share of 2% to 3% annually, Number two, increasing same-store performance through thoughtful in the state, local, and high credit government-adjacent tenancy. And three, executing value-creating development opportunities into high credit stabilized assets. This strategy is designed to balance growth and durability and build a portfolio that ...

Financial Data and Key Metrics Changes - For Q4 2025, net income per share was $0.10, and Core FFO per share grew by nearly 6% year-over-year to $0.77 [15] - For the full year 2025, net income per share was $0.29, and Core FFO per share grew by nearly 3% year-over-year to $2.99 [15] - Cash Available for Distribution for Q4 was $29.1 million, and for the full year, it was $118.8 million [15] Business Line Data and Key Metrics Changes - The portfolio occupancy rate remained near historical highs at 97%, with weighted average lease terms of roughly a decade [8] - The company successfully extended leases at FBI Knoxville and executed a long-term renewal on FBI San Antonio [16] - The average rent spread achieved on renewals is anticipated to be 14%, with a weighted average total renewal term of 15.7 years [17] Market Data and Key Metrics Changes - The company completed the acquisition of a three-asset portfolio in Virginia for $44.5 million, totaling approximately 298,000 sq ft, with long-dated leases and built-in rent growth [19][20] - The acquisition was completed at a going-in cash cap rate of approximately 11%, which is in excess of the company's cost of capital [20] Company Strategy and Development Direction - The company aims for 2%-3% Core FFO growth per share annually, increasing Same-Store performance, and executing value-creating development opportunities [4][5] - The strategic priorities remain unchanged, focusing on disciplined growth and portfolio enhancement [4] - The company is well-positioned to meet the increasing demand for secure, modern government facilities [7] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism for 2026, with guidance reflecting approximately 3% Core FFO per share growth [9][22] - The company believes that the government’s focus on efficiency and public-private partnerships will favor its business model [37] - Management highlighted the importance of maintaining strong relationships with government agencies to support mission-critical work [39] Other Important Information - The company’s current net debt to annualized quarterly EBITDA stands at 7.5x, with expectations for improvement [18][19] - The company is monitoring the market for attractive acquisition opportunities while maintaining disciplined capital management [22] Q&A Session Summary Question: Can you touch on the $1.5 billion pipeline and its near-term opportunities? - Management indicated optimism for 2026 and mentioned sorting through a significant number of transactions in the pipeline [27] Question: Have you had conversations regarding lease structures with the new GSA Administrator? - Management noted that the new administrator is focused on efficiency and public-private partnerships, which could favor the company [30] Question: Can you discuss the Virginia acquisition and its lease expiration schedule? - Management clarified that the Commonwealth of Virginia is the largest tenant with long-dated leases, and the 2027 expiration is immaterial [34] Question: What are the implications of budget cuts across various agencies? - Management emphasized that while there are cuts, the focus remains on delivering mission-critical work efficiently, which supports the company's strategy [38]

Financial Data and Key Metrics Changes - For Q4 2025, net income per share was $0.10, and Core FFO per share grew by nearly 6% year-over-year to $0.77 [14] - For the full year 2025, net income per share was $0.29, and Core FFO per share grew by nearly 3% year-over-year to $2.99 [14] - Cash Available for Distribution for Q4 2025 was $29.1 million, and for the full year, it was $118.8 million [14] Business Line Data and Key Metrics Changes - The company achieved a Core FFO growth per share of 2%-3% annually, maintaining a strong portfolio occupancy rate near historical highs at 97% [4][8] - The weighted average lease term for the portfolio is approximately a decade, reflecting the durability of the tenant base [8] Market Data and Key Metrics Changes - The company completed the acquisition of a three-asset portfolio in Virginia for $44.5 million, with a going-in cash cap rate of approximately 11% [18][19] - The acquisition includes long-dated leases with 2.5% annual rent escalations, supporting stable and growing cash flows [19] Company Strategy and Development Direction - The company’s strategic priorities include Core FFO growth, increasing Same-Store performance, and executing value-creating development opportunities [5] - The focus remains on government-related cash flows and disciplined capital allocation, with an emphasis on partnerships with state agencies due to their strong credit profiles [9][20] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism for 2026, guiding to approximately 3% Core FFO per share growth, supported by operational efficiencies and successful lease renewals [21][22] - The company is well-positioned to meet the increasing demand for secure, modern government facilities, reinforcing its commitment to providing high-quality environments for public servants [6][10] Other Important Information - The company has a robust development pipeline, with key projects such as the State Crime Lab in Florida and a U.S. Courthouse in Flagstaff progressing well [16][17] - Management highlighted the appointment of Ed Forst as Administrator of the GSA, expressing confidence in collaborating with him to maximize value for shareholders [12][13] Q&A Session Summary Question: Can you touch on the $1.5 billion pipeline and its near-term opportunities? - Management indicated optimism for 2026 and mentioned sorting through a significant number of transactions in the pipeline, focusing on assets that provide a strong spread to the cost of capital [25][26] Question: Have you had conversations regarding lease structures with the new GSA Administrator? - Management noted that the new administrator is focused on government efficiency and public-private partnerships, which could favor the company's leasing strategy [28][29] Question: Can you discuss the Virginia acquisition and its lease expiration schedule? - Management clarified that the Commonwealth of Virginia is the largest tenant with long-dated leases, and the 2027 expiration is immaterial [32][33] Question: What are the implications of budget cuts across various agencies? - Management acknowledged the cuts but emphasized that the focus remains on mission-critical work, and the company is well-positioned to support government efficiency [35][36][37]

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]