Easterly Government Properties(US:DEA)2026-02-23 17:00Financial 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]