Easterly Government Properties(US:DEA)2026-02-23 17:02Financial Data and Key Metrics Changes - For Q4 2025, net income per share was $0.10, and Core FFO per share grew 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 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 company achieved a portfolio occupancy rate near historical highs at 97% [8] - The weighted average lease term for the portfolio is approximately a decade [8] - The average rent spread achieved on renewals is anticipated to be 14% [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 [19] - 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 and focuses on increasing Same-Store performance through diversification into state and local government tenancies [4][5] - The strategic priorities include executing value-creating development opportunities and maintaining a strong balance sheet [4][11] - The company is 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, guiding approximately 3% Core FFO per share growth [9][22] - The company remains disciplined in capital allocation and is focused on tenant retention and execution across its development pipeline [22] - Management noted that ongoing federal real estate discussions highlight the need for public-private partnerships, which favor the company's business model [37] Other Important Information - The company has renewed 38 leases since its IPO, with a significant portion completed without associated renewal TI work [16] - The development portfolio includes projects like the State Crime Lab in Florida and a U.S. Courthouse in Arizona, with expected delivery dates in 2026 and 2027 [18] 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 government efficiency and public-private partnerships, which could favor the company's leasing model [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 the government is focused on efficiency and reducing waste, which could benefit the company's mission-critical assets [38]