Easterly Government Properties(US:DEA)2023-02-28 16:48Financial Data and Key Metrics Changes - For Q4 2022, net income per share was $0.18, FFO per share was $0.30, and FFO as adjusted per share was $0.29. For the full year 2022, net income per share was $0.35, FFO per share was $1.27, and FFO as adjusted per share was $1.26 [21][54] - Cash available for distribution was $21.7 million for Q4 2022 and $108.5 million for the year ended December 31, 2022 [21] Business Line Data and Key Metrics Changes - The company acquired seven properties in 2022, totaling over 800,000 square feet of government-leased space, focusing on newer buildings with strong cash flow visibility [14] - The company executed 13 renewals in 2022, achieving an average rent spread of 8% on the remaining 11 renewals, with an average total renewal term of 15 years [25] Market Data and Key Metrics Changes - The company noted a widening bid-ask spread in the market due to rising interest rates, affecting asset pricing [12] - The company has a total indebtedness of approximately $1.3 billion, with a net debt to annualized quarterly pro forma EBITDA ratio of 7.1 times [49] Company Strategy and Development Direction - The company is maintaining an active presence in the acquisition market but remains cautious due to rising capital costs, focusing only on accretive deals [15] - The company executed its first portfolio disposition, selling 10 buildings to enhance the quality and NAV of its remaining portfolio [16] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the underlying fundamentals of the business despite short-term challenges from rising capital costs and a slow transaction market [20] - The company anticipates increased demand for its facilities as the population grows, benefiting occupancy needs over time [11] Other Important Information - The company has over $434 million in debt capacity and nearly $93 million in unsettled forward equity, providing ample opportunity for accretive deals [24] - The company is transitioning its guidance to a core FFO metric for 2023, with guidance for core FFO per share in the range of $1.12 to $1.15 [26][54] Q&A Session Questions and Answers Question: Can you provide color around operating expenses and interest expense for 2023? - Management indicated that inflationary expectations in commodities and labor costs are influencing the bridge to 2023 guidance [57] Question: Where would cap rates need to be for more accretive acquisitions? - Management noted that cap rates in the high-6s to low-7s range would be more favorable for acquisitions, but the market has not yet reached that point [60] Question: Have you closed on the Jacksonville property? - Management confirmed that the Jacksonville property has not yet closed and is assumed to be later on [70]