Easterly Government Properties Inc.
10/27/2025 | Press release | Distributed by Public on 10/27/2025 14:31
Quarterly Report for Quarter Ending September 30, 2025 (Form 10-Q)
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
Forward-Looking Statements
This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended (the "Securities Act") and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). We caution investors that forward-looking statements are based on management's beliefs and on assumptions made by, and information currently available to, management. When used, the words "anticipate", "believe", "estimate", "expect", "intend", "may", "might", "plan", "potential", "project", "result", "seek", "should", "target", "will", and similar expressions which do not relate solely to historical matters are intended to identify forward-looking statements. These statements are subject to risks, uncertainties, and assumptions and are not guarantees of future performance, which may be affected by known and unknown risks, trends, uncertainties, and factors that are beyond our control. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those anticipated, estimated, or projected. We expressly disclaim any responsibility to update our forward-looking statements, whether as a result of new information, future events, or otherwise. Accordingly, investors should use caution in relying on forward-looking statements, which are based on results and trends at the time they are made, to anticipate future results or trends.
Some of the risks and uncertainties that may cause our actual results, performance, or achievements to differ materially from those expressed or implied by forward-looking statements include, among others, the following:
•
the factors included under the heading "Risk Factors" in our Annual Report on Form 10-K for the year ended December 31, 2024 and the factors included under the heading "Risk Factors" in our other public filings;
•
risks associated with our dependence on the U.S. Government and its agencies for substantially all of our revenues, including credit risk and risk that the U.S. Government reduces its spending on real estate or that it changes its preference away from leased properties, including as a result of or in connection with any shutdown of the U.S. Government;
•
risks associated with ownership and development of real estate;
•
the risk of decreased rental rates or increased vacancy rates;
•
the loss of key personnel;
•
general volatility of the capital and credit markets and the market price of our common stock;
•
the risk we may lose one or more major tenants;
•
difficulties in completing and successfully integrating acquisitions;
•
failure of acquisitions or development projects to occur at anticipated levels or yield anticipated results;
•
risks associated with actual or threatened terrorist attacks;
•
risks associated with our joint venture activities;
•
intense competition in the real estate market that may limit our ability to attract or retain tenants or re-lease space;
•
insufficient amounts of insurance or exposure to events that are either uninsured or underinsured;
•
uncertainties and risks related to adverse weather conditions, natural disasters and climate change;
•
exposure to liability relating to environmental and health and safety matters;
•
limited ability to dispose of assets because of the relative illiquidity of real estate investments and the nature of our assets;
•
exposure to litigation or other claims;
•
risks associated with breaches of our data security;
•
risks associated with our indebtedness, including failure to refinance current or future indebtedness on favorable terms, or at all, failure to meet the restrictive covenants and requirements in our existing and new debt agreements, fluctuations in interest rates and increased costs to refinance or issue new debt;
•
risks associated with derivatives or hedging activity;
•
risks associated with mortgage debt or unsecured financing or the unavailability thereof, which could make it difficult to finance or refinance properties and could subject us to foreclosure; and
•
adverse impacts from any future pandemic, epidemic or outbreak of any highly infectious disease on the U.S., regional and global economies and our financial condition and results of operations.
For a further discussion of these and other factors that could affect us and the statements contained herein, see the section entitled "Item 1A. Risk Factors" in our Annual Report on Form 10-K for the year ended December 31, 2024, as may be supplemented or amended from time to time.
Overview
References to "we," "our," "us" and "the Company" refer to Easterly Government Properties, Inc., a Maryland corporation, together with our consolidated subsidiaries, including Easterly Government Properties LP, a Delaware limited partnership, which we refer to herein as the "Operating Partnership." We present certain financial information and metrics "at Easterly Share," which is calculated on an entity-by-entity basis. "At Easterly Share" information, which we also refer to as being "at share," "pro rata," "our pro rata share" or "our share" is not, and is not intended to be, a presentation in accordance with accounting principles generally accepted in the United States of America ("GAAP").
We are an internally managed real estate investment trust ("REIT"), focused primarily on the acquisition, development and management of Class A commercial properties that are leased to U.S. Government agencies that serve essential functions. We generate approximately 90% of our revenue by leasing our properties to such agencies, either directly or through the U.S. General Services Administration ("GSA"). Our objective is to generate attractive risk-adjusted returns for our stockholders over the long term through dividends and capital appreciation.
We focus primarily on acquiring, developing and managing U.S. Government-leased properties that are essential to supporting the mission of the tenant agency and strive to be a partner of choice for the U.S. Government, working closely with the tenant agency to meet its needs and objectives. We continue to pursue opportunities to add properties to our portfolio, including acquiring properties leased to state and local governments with strong creditworthiness and other opportunities that directly or indirectly support the mission of select government agencies. As of September 30, 2025, we wholly owned 92 operating properties and ten operating properties through an unconsolidated joint venture (the "JV") in the United States, encompassing approximately 10.2 million leased square feet (9.6 million pro rata), including 92 operating properties that were leased primarily to U.S. Government tenant agencies, six operating properties leased to tenant agencies of a U.S. state or local government and four operating properties that were entirely leased to private tenants. As of September 30, 2025, our operating properties were 97% leased. For purposes of calculating percentage leased, we exclude from the denominator total square feet that was unleased and to which we attributed no value at the time of acquisition. In addition, we wholly owned four properties under development that we expect will encompass approximately 0.3 million leased square feet upon completion.
The Operating Partnership holds substantially all of our assets and conducts substantially all of our business. We are the sole general partner of the Operating Partnership and owned approximately 96.3% of the aggregate limited partnership interests in the Operating Partnership, which we refer to herein as common units, as of September 30, 2025. We have elected to be taxed as a REIT and believe that we have operated and have been organized in conformity with the requirements for qualification and taxation as a REIT for U.S. federal income tax purposes commencing with our taxable year ended December 31, 2015.
Reverse Stock Split and Reduction in Authorized Shares
On April 28, 2025, we effected a 1-for-2.5 reverse stock split of our issued and outstanding common stock, which reverse stock split was previously approved by our Board of Directors (the "Reverse Stock Split"). As a result, every 2.5 shares of issued and outstanding common stock were consolidated into 1 share. Concurrently with the Reverse Stock Split, the Operating Partnership completed a corresponding 1-for-2.5 reverse unit split of outstanding common units and LTIP units (the "Reverse Unit Split"). All share and per share amounts, including earnings per share, in these financial statements have been retrospectively adjusted for all periods presented to reflect the Reverse Stock Split. Accordingly, the Reverse Stock Split reduced the number of shares outstanding on April 28, 2025 from 112,263,028 to 44,905,158. On May 8, 2025, we reduced the number of our authorized shares of common stock from 200,000,000 to 80,000,000, in proportion with the 1-for-2.5 Reverse Stock Split effected by us on April 28, 2025. The par value of the common stock remained unchanged at $0.01 per share following both the Reverse Stock Split and the reduction in authorized shares. For additional information, see Note 9, Note 10 and Note 11 to the Consolidated Financial Statements.
U.S. Government Shutdown
Since October 1, 2025, the U.S. Congress has not passed any of its annual appropriations bills for federal fiscal year 2026, leading to the ongoing U.S. Government shutdown. Despite the shutdown, we have continued to receive scheduled rent payments with respect to our portfolio of government-leased properties, consistent with previous U.S. Government shutdowns. Rent payments under our leases with the GSA are paid for from the Federal Buildings Fund, which is not subject to direct federal appropriations, and our leases with other federal agencies have been executed under delegation from the GSA, and are therefore guaranteed by the Federal Buildings Fund.
The longest shutdown in the country's history, ending in January 2019, did not materially affect the GSA's ability to make its rent payments to lessors in a timely manner, despite the lack of appropriations. Although we cannot predict when the U.S. Government shutdown will end nor its outcomes, we do not expect delays in the collection of our rental payments.
2025 Activity
Acquisitions
On April 3, 2025, we acquired a 289,873 square foot facility leased primarily to the District of Columbia Government with a lease through February 2038.
On May 7, 2025, we acquired a 74,549 leased square foot Department of Homeland Security ("DHS") facility near Burlington, Vermont with a 10-year lease that does not expire until May 2031.
On August 28, 2025, we acquired a 138,125 leased square foot York Space Systems facility in Greenwood Village, Colorado with a 10-year lease through December 2031.
Development
On May 19, 2025, we acquired 100% of the membership interests in an entity that has the sole rights to a development project in Fort Myers, Florida for $1.8 million. On July 2, 2025, in connection with such development rights, we acquired land to develop an approximately 64,000 square foot laboratory for $5.8 million. The laboratory will be primarily leased to the Florida Department of Law Enforcement over a 25-year non-cancelable term.
On June 11, 2025, we acquired land to develop a 40,035 square foot Federal District and Federal Magistrate Courthouse in Medford, Oregon for $1.9 million. The courthouse will be primarily leased to the GSA for beneficial use of the Judiciary of the U.S. Government ("JUD") over a 20-year non-cancelable term.
Dispositions
On September 29, 2025, we sold ICE - Otay, a 52,881 rentable square foot office building located in San Diego, California, to a third party. Net proceeds from the sale of the operating property were approximately $3.5 million and we did not recognize a gain or loss on the sale. We assessed the recoverability of the carrying amount of ICE - Otay upon a change in circumstances and events to sell the property during the third quarter of 2025. The assessment resulted in the remeasurement of ICE - Otay, which was written down to its estimated fair value. Our estimate of the fair value was based on a pending offer to acquire the property. The remeasurement resulted in an impairment loss of $2.5 million, which is included in Impairment loss in our Consolidated Statements of Operations.
Operating Properties
As of September 30, 2025, our operating properties were 97% leased with a weighted average annualized lease income per leased square foot of $36.74 ($36.45 pro rata) and a weighted average age of approximately 16.4 years based on the date the property was built or renovated-to-suit, where applicable. We calculate annualized lease income as annualized contractual base rent for the last month in a specified period, plus the annualized straight line rent adjustments for the last month in such period and the annualized net expense reimbursements earned by us for the last month in such period.
The table set forth below shows information relating to the properties we owned, or in which we had an ownership interest, at September 30, 2025, and it includes properties held by the JV:
|
Property Name |
Location |
Property |
Tenant Lease |
Leased |
Annualized |
Percentage |
Annualized |
|||||||||||||||||
|
Wholly Owned U.S. Government Leased Properties |
||||||||||||||||||||||||
|
VA - Loma Linda |
Loma Linda, CA |
OC |
2036 |
327,614 |
$ |
16,774,664 |
4.4 |
% |
$ |
51.20 |
||||||||||||||
|
USCIS - Kansas City (3) |
Lee's Summit, MO |
O |
2028 - 2042 |
417,945 |
10,502,950 |
2.8 |
% |
25.13 |
||||||||||||||||
|
JSC - Suffolk |
Suffolk, VA |
SF |
2028 |
403,737 |
8,556,069 |
2.3 |
% |
21.19 |
||||||||||||||||
|
Various GSA - Chicago |
Des Plaines, IL |
O |
2026 |
188,768 |
7,801,422 |
2.1 |
% |
41.33 |
||||||||||||||||
|
IRS - Fresno |
Fresno, CA |
O |
2033 |
180,481 |
6,966,712 |
1.9 |
% |
38.60 |
||||||||||||||||
|
FBI - Salt Lake |
Salt Lake City, UT |
SF |
2032 |
169,542 |
6,839,099 |
1.8 |
% |
40.34 |
||||||||||||||||
|
Various GSA - Buffalo (4) |
Buffalo, NY |
O |
2026-2039 |
239,924 |
6,315,045 |
1.7 |
% |
26.32 |
||||||||||||||||
|
Various GSA - Portland(5) |
Portland, OR |
O |
2025-2039 |
175,214 |
5,926,533 |
1.6 |
% |
33.82 |
||||||||||||||||
|
VA - San Jose |
San Jose, CA |
OC |
2038 |
90,085 |
5,815,446 |
1.6 |
% |
64.56 |
||||||||||||||||
|
EPA - Lenexa |
Lenexa, KS |
O |
2027 |
169,585 |
5,796,626 |
1.5 |
% |
34.18 |
||||||||||||||||
|
FBI - Tampa |
Tampa, FL |
SF |
2040 |
138,000 |
5,314,468 |
1.4 |
% |
38.51 |
||||||||||||||||
|
FBI - San Antonio |
San Antonio, TX |
SF |
2025 |
148,584 |
5,258,653 |
1.4 |
% |
35.39 |
||||||||||||||||
|
FDA - Alameda |
Alameda, CA |
L |
2039 |
69,624 |
5,020,369 |
1.3 |
% |
72.11 |
||||||||||||||||
|
FBI / DEA - El Paso |
El Paso, TX |
SF |
2028 |
203,683 |
4,920,871 |
1.3 |
% |
24.16 |
||||||||||||||||
|
PTO - Arlington |
Arlington, VA |
SF |
2035 |
190,546 |
4,773,569 |
1.3 |
% |
25.05 |
||||||||||||||||
|
USCIS - Lincoln |
Lincoln, NE |
O |
2026 |
137,671 |
4,663,260 |
1.2 |
% |
33.87 |
||||||||||||||||
|
FEMA - Tracy |
Tracy, CA |
W |
2038 |
210,373 |
4,652,865 |
1.2 |
% |
22.12 |
||||||||||||||||
|
TREAS - Parkersburg |
Parkersburg, WV |
O |
2041 |
182,500 |
4,419,018 |
1.2 |
% |
24.21 |
||||||||||||||||
|
FDA - Lenexa |
Lenexa, KS |
L |
2040 |
59,690 |
4,342,421 |
1.2 |
% |
72.75 |
||||||||||||||||
|
FBI - Mobile |
Mobile, AL |
SF |
2029 |
76,112 |
4,293,743 |
1.1 |
% |
56.41 |
||||||||||||||||
|
ICE - Dallas (6) |
Irvine, TX |
SF |
2032 / 2040 |
135,200 |
4,277,647 |
1.1 |
% |
31.64 |
||||||||||||||||
|
VA - South Bend |
Mishakawa, IN |
OC |
2032 |
86,363 |
4,159,720 |
1.1 |
% |
48.17 |
||||||||||||||||
|
FBI - Pittsburgh |
Pittsburgh, PA |
SF |
2027 |
100,054 |
4,153,110 |
1.1 |
% |
41.51 |
||||||||||||||||
|
FBI - New Orleans |
New Orleans, LA |
SF |
2029 |
137,679 |
4,005,179 |
1.1 |
% |
29.09 |
||||||||||||||||
|
FBI - Omaha |
Omaha, NE |
SF |
2044 |
112,196 |
3,981,453 |
1.1 |
% |
35.49 |
||||||||||||||||
|
VA - Mobile |
Mobile, AL |
OC |
2033 |
79,212 |
3,968,533 |
1.1 |
% |
50.10 |
||||||||||||||||
|
FBI - Albany |
Albany, NY |
SF |
2036 |
69,476 |
3,592,965 |
1.0 |
% |
51.72 |
||||||||||||||||
|
FBI - Birmingham |
Birmingham, AL |
SF |
2042 |
96,278 |
3,592,319 |
1.0 |
% |
37.31 |
||||||||||||||||
|
EPA - Kansas City |
Kansas City, KS |
L |
2043 |
55,833 |
3,574,925 |
1.0 |
% |
64.03 |
||||||||||||||||
|
FBI - Knoxville |
Knoxville, TN |
SF |
2025 |
99,130 |
3,516,228 |
0.9 |
% |
35.47 |
||||||||||||||||
|
USFS II - Albuquerque |
Albuquerque, NM |
O |
2031 |
98,720 |
3,447,901 |
0.9 |
% |
34.93 |
||||||||||||||||
|
DOT - Lakewood |
Lakewood, CO |
O |
2039 |
116,046 |
3,404,199 |
0.9 |
% |
29.33 |
||||||||||||||||
|
ICE - Charleston |
North Charleston, SC |
SF |
2027 |
65,124 |
3,392,940 |
0.9 |
% |
52.10 |
||||||||||||||||
|
FBI - Richmond |
Richmond, VA |
SF |
2041 |
96,607 |
3,360,867 |
0.9 |
% |
34.79 |
||||||||||||||||
|
Property Name |
Location |
Property |
Tenant Lease |
Leased |
Annualized |
Percentage |
Annualized |
|||||||||||||||||
|
Wholly Owned U.S. Government Leased Properties (Cont.) |
||||||||||||||||||||||||
|
VA - Chico |
Chico, CA |
OC |
2034 |
51,647 |
3,348,155 |
0.9 |
% |
64.83 |
||||||||||||||||
|
DEA - Sterling |
Sterling, VA |
L |
2038 |
57,692 |
3,282,887 |
0.9 |
% |
56.90 |
||||||||||||||||
|
FBI - Little Rock |
Little Rock, AR |
SF |
2041 |
102,377 |
3,262,032 |
0.9 |
% |
31.86 |
||||||||||||||||
|
USCIS - Tustin |
Tustin, CA |
O |
2034 |
66,818 |
3,238,830 |
0.9 |
% |
48.47 |
||||||||||||||||
|
JUD - Del Rio |
Del Rio, TX |
C |
2041 |
89,880 |
3,197,759 |
0.9 |
% |
35.58 |
||||||||||||||||
|
DEA - Vista |
Vista, CA |
L |
2035 |
52,293 |
3,147,780 |
0.8 |
% |
60.20 |
||||||||||||||||
|
VA - Indianapolis |
Brownsburg, IN |
OC |
2041 |
80,000 |
2,973,092 |
0.8 |
% |
37.16 |
||||||||||||||||
|
VA - Orange |
Orange, CT |
OC |
2034 |
56,330 |
2,965,921 |
0.8 |
% |
52.65 |
||||||||||||||||
|
ICE - Albuquerque |
Albuquerque, NM |
SF |
2027 |
71,100 |
2,857,704 |
0.8 |
% |
40.19 |
||||||||||||||||
|
SSA - Charleston |
Charleston, WV |
O |
2029 |
110,000 |
2,838,184 |
0.8 |
% |
25.80 |
||||||||||||||||
|
JUD - El Centro |
El Centro, CA |
C |
2034 |
43,345 |
2,814,240 |
0.8 |
% |
64.93 |
||||||||||||||||
|
DEA - Dallas Lab |
Dallas, TX |
L |
2038 |
49,723 |
2,805,697 |
0.7 |
% |
56.43 |
||||||||||||||||
|
DEA - Pleasanton |
Pleasanton, CA |
L |
2035 |
42,480 |
2,788,150 |
0.7 |
% |
65.63 |
||||||||||||||||
|
DEA - Upper Marlboro |
Upper Marlboro, MD |
L |
2037 |
50,978 |
2,776,446 |
0.7 |
% |
54.46 |
||||||||||||||||
|
DHS - Burlington |
Williston, VT |
SF |
2031 |
74,549 |
2,738,632 |
0.7 |
% |
36.74 |
||||||||||||||||
|
NARA - Broomfield |
Broomfield, CO |
W |
2032 |
161,730 |
2,697,002 |
0.7 |
% |
16.68 |
||||||||||||||||
|
TREAS - Birmingham |
Birmingham, AL |
O |
2029 |
83,676 |
2,632,456 |
0.7 |
% |
31.46 |
||||||||||||||||
|
DHS - Atlanta (7) |
Atlanta, GA |
SF |
2031 - 2038 |
91,185 |
2,590,303 |
0.7 |
% |
28.41 |
||||||||||||||||
|
USAO - Louisville |
Louisville, KY |
SF |
2031 |
60,000 |
2,549,994 |
0.7 |
% |
42.50 |
||||||||||||||||
|
JUD - Charleston |
Charleston, SC |
C |
2040 |
52,339 |
2,536,155 |
0.7 |
% |
48.46 |
||||||||||||||||
|
JUD - Jackson |
Jackson, TN |
C |
2043 |
75,043 |
2,418,461 |
0.6 |
% |
32.23 |
||||||||||||||||
|
IRS - Ogden |
Ogden, UT |
W |
2029 |
100,000 |
2,373,650 |
0.6 |
% |
23.74 |
||||||||||||||||
|
Various GSA - Cleveland (8) |
Brooklyn Heights, OH |
O |
2028 - 2040 |
61,384 |
2,338,869 |
0.6 |
% |
38.10 |
||||||||||||||||
|
CBP - Savannah |
Savannah, GA |
L |
2033 |
35,000 |
2,306,216 |
0.6 |
% |
65.89 |
||||||||||||||||
|
DEA - Dallas |
Dallas, TX |
SF |
2041 |
71,827 |
2,189,642 |
0.6 |
% |
30.48 |
||||||||||||||||
|
NWS - Kansas City |
Kansas City, MO |
SF |
2033 |
94,378 |
2,163,306 |
0.6 |
% |
22.92 |
||||||||||||||||
|
DEA - Santa Ana |
Santa Ana, CA |
SF |
2029 |
39,905 |
2,030,670 |
0.5 |
% |
50.89 |
||||||||||||||||
|
GSA - Clarksburg |
Clarksburg, WV |
O |
2039 |
70,495 |
1,934,924 |
0.5 |
% |
27.45 |
||||||||||||||||
|
DEA - North Highlands |
Sacramento, CA |
SF |
2033 |
37,975 |
1,893,254 |
0.5 |
% |
49.86 |
||||||||||||||||
|
JUD - Aberdeen |
Aberdeen, MS |
C |
2040 |
45,194 |
1,890,909 |
0.5 |
% |
41.84 |
||||||||||||||||
|
DEA - Riverside |
Riverside, CA |
SF |
2032 |
34,354 |
1,873,897 |
0.5 |
% |
54.55 |
||||||||||||||||
|
NPS - Omaha |
Omaha, NE |
SF |
2029 |
62,772 |
1,873,659 |
0.5 |
% |
29.85 |
||||||||||||||||
|
ICE - Orlando |
Orlando, FL |
SF |
2040 |
49,420 |
1,861,991 |
0.5 |
% |
37.68 |
||||||||||||||||
|
VA - Golden |
Golden, CO |
W |
2026 |
56,753 |
1,783,879 |
0.5 |
% |
31.43 |
||||||||||||||||
|
JUD - Newport News |
Newport News, VA |
C |
2033 |
35,005 |
1,684,773 |
0.4 |
% |
48.13 |
||||||||||||||||
|
USCG - Martinsburg |
Martinsburg, WV |
SF |
2027 |
59,547 |
1,634,284 |
0.4 |
% |
27.45 |
||||||||||||||||
|
VA - Charleston |
North Charleston, SC |
W |
2040 |
97,718 |
1,511,163 |
0.4 |
% |
15.46 |
||||||||||||||||
|
USAO - Springfield |
Springfield, IL |
SF |
2038 |
43,600 |
1,399,201 |
0.4 |
% |
32.09 |
||||||||||||||||
|
JUD - Council Bluffs |
Council Bluffs, IA |
C |
2041 |
28,900 |
1,368,503 |
0.4 |
% |
47.35 |
||||||||||||||||
|
DEA - Birmingham |
Birmingham, AL |
SF |
2038 |
35,616 |
1,260,657 |
0.3 |
% |
35.40 |
||||||||||||||||
|
DEA - Albany |
Albany, NY |
SF |
2042 |
31,976 |
1,185,675 |
0.3 |
% |
37.08 |
||||||||||||||||
|
HSI - Orlando |
Orlando, FL |
SF |
2036 |
27,840 |
1,082,677 |
0.3 |
% |
38.89 |
||||||||||||||||
|
SSA - Dallas |
Dallas, TX |
SF |
2035 |
27,200 |
1,073,940 |
0.3 |
% |
39.48 |
||||||||||||||||
|
JUD - South Bend |
South Bend, IN |
C |
2027 |
30,119 |
811,838 |
0.2 |
% |
26.95 |
||||||||||||||||
|
ICE - Louisville |
Louisville, KY |
SF |
2036 |
17,420 |
662,835 |
0.2 |
% |
38.05 |
||||||||||||||||
|
Property Name |
Location |
Property |
Tenant Lease |
Leased |
Annualized |
Percentage |
Annualized |
|||||||||||||||||
|
Wholly Owned U.S. Government Leased Properties (Cont.) |
||||||||||||||||||||||||
|
DEA - San Diego |
San Diego, CA |
W |
2032 |
16,100 |
563,532 |
0.2 |
% |
35.00 |
||||||||||||||||
|
DEA - Bakersfield |
Bakersfield, CA |
SF |
2038 |
9,800 |
496,834 |
0.1 |
% |
50.70 |
||||||||||||||||
|
SSA - San Diego |
San Diego, CA |
SF |
2032 |
10,059 |
452,860 |
0.1 |
% |
45.02 |
||||||||||||||||
|
Subtotal |
7,881,138 |
$ |
283,545,307 |
75.6 |
% |
$ |
35.98 |
|||||||||||||||||
|
Wholly Owned State and Local Government Property |
||||||||||||||||||||||||
|
DC - Capitol Plaza (9) |
Washington, DC |
O |
2027 - 2038 |
284,688 |
18,345,138 |
4.9 |
% |
64.44 |
||||||||||||||||
|
Wake County III - Cary (10) |
Cary, NC |
O |
2027 / 2034 |
113,722 |
3,495,663 |
0.9 |
% |
30.74 |
||||||||||||||||
|
CA - Anaheim |
Anaheim, CA |
O |
2033 / 2034 |
95,273 |
3,364,379 |
0.9 |
% |
35.31 |
||||||||||||||||
|
Wake County II - Cary |
Cary, NC |
O |
2034 |
98,340 |
2,840,676 |
0.8 |
% |
28.89 |
||||||||||||||||
|
Wake County I - Cary |
Cary, NC |
O |
2034 |
75,401 |
2,222,073 |
0.6 |
% |
29.47 |
||||||||||||||||
|
USFS I - Albuquerque |
Albuquerque, NM |
O |
2035 |
29,032 |
108,000 |
0.0 |
% |
3.72 |
||||||||||||||||
|
Subtotal |
696,456 |
30,375,929 |
8.1 |
% |
$ |
43.62 |
||||||||||||||||||
|
Wholly Owned Privately Leased Property |
||||||||||||||||||||||||
|
York Space Systems - Greenwood Village |
Greenwood Village, CO |
SF |
2031 |
138,125 |
5,012,523 |
1.3 |
% |
36.29 |
||||||||||||||||
|
Northrop Grumman - Dayton |
Beavercreek, OH |
SF |
2029 |
99,246 |
2,629,161 |
0.7 |
% |
26.49 |
||||||||||||||||
|
Northrop Grumman - Aurora |
Aurora, CO |
SF |
2032 |
104,136 |
2,368,386 |
0.6 |
% |
22.74 |
||||||||||||||||
|
501 East Hunter Street - Lummus Corporation |
Lubbock, TX |
W |
2028 |
70,078 |
410,390 |
0.1 |
% |
5.86 |
||||||||||||||||
|
Subtotal |
411,585 |
$ |
10,420,460 |
2.7 |
% |
$ |
25.32 |
|||||||||||||||||
|
Wholly Owned Properties Total / Weighted Average |
8,989,179 |
$ |
324,341,696 |
86.4 |
% |
$ |
36.08 |
|||||||||||||||||
|
Unconsolidated Real Estate Venture U.S. Government Leased Properties |
||||||||||||||||||||||||
|
VA - Phoenix (11) |
Phoenix, AZ |
OC |
2042 |
257,294 |
10,836,673 |
2.9 |
% |
42.12 |
||||||||||||||||
|
VA - San Antonio (11) |
San Antonio, TX |
OC |
2041 |
226,148 |
9,334,456 |
2.5 |
% |
41.28 |
||||||||||||||||
|
VA - Jacksonville (11) |
Jacksonville, FL |
OC |
2043 |
193,100 |
7,372,700 |
2.0 |
% |
38.18 |
||||||||||||||||
|
VA - Chattanooga(11) |
Chattanooga, TN |
OC |
2035 |
94,566 |
4,371,201 |
1.2 |
% |
46.22 |
||||||||||||||||
|
VA - Lubbock(11) (12) |
Lubbock, TX |
OC |
2040 |
120,916 |
4,259,993 |
1.1 |
% |
35.23 |
||||||||||||||||
|
VA - Marietta (11) |
Marietta, GA |
OC |
2041 |
76,882 |
3,892,927 |
1.0 |
% |
50.64 |
||||||||||||||||
|
VA - Birmingham(11) |
Irondale, AL |
OC |
2041 |
77,128 |
3,192,361 |
0.9 |
% |
41.39 |
||||||||||||||||
|
VA - Corpus Christi (11) |
Corpus Christi, TX |
OC |
2042 |
69,276 |
2,974,771 |
0.8 |
% |
42.94 |
||||||||||||||||
|
VA - Columbus (11) |
Columbus, GA |
OC |
2042 |
67,793 |
2,925,752 |
0.8 |
% |
43.16 |
||||||||||||||||
|
VA - Lenexa(11) |
Lenexa, KS |
OC |
2041 |
31,062 |
1,355,340 |
0.4 |
% |
43.63 |
||||||||||||||||
|
Subtotal |
1,214,165 |
$ |
50,516,174 |
13.6 |
% |
$ |
41.61 |
|||||||||||||||||
|
Total / Weighted Average |
10,203,344 |
$ |
374,857,870 |
100.0 |
% |
$ |
36.74 |
|||||||||||||||||
|
Total / Weighted Average at Easterly's Share |
9,632,685 |
$ |
351,115,269 |
$ |
36.45 |
|||||||||||||||||||
(1)
OC=Outpatient Clinic; SF=Specialized Facility; O=Office; C=Courthouse; L=Laboratory; W=Warehouse.
(2)
The year of lease expiration does not include renewal options.
(3)
Private tenants occupy 101,627 leased square feet.
(4)
A state government tenant occupies 14,274 leased square feet.
(5)
Private tenants occupy 12,259 leased square feet.
(6)
Private tenants occupy 54,677 leased square feet.
(7)
A private tenant occupies 17,373 leased square feet.
(8)
A private tenant occupies 11,402 leased square feet.
(9)
Private tenants occupy 20,299 leased square feet.
(10)
A private tenant occupies 37,858 leased square feet.
(11)
We own 53.0% of the property through an unconsolidated joint venture.
(12)
Asset is subject to a ground lease where the unconsolidated joint venture is the lessee.
Certain of our leases are currently in the "soft-term" period of the lease, meaning that the U.S. Government tenant agency has the right to terminate the lease prior to its stated lease end date. We believe that, from the U.S. Government's perspective, leases with such provisions are helpful for budgetary purposes. While some of our leases are contractually subject to early termination, we do not believe that our tenant agencies are likely to terminate these leases early given the build-to-suit features at the properties subject to the leases, the weighted average age of these properties based on the date the property was built or renovated-to-suit, where applicable (approximately 20.3 years as of September 30, 2025), the mission-critical focus of the properties subject to the leases and the current level of operations at such properties.
The following table sets forth a schedule of lease expirations for leases in place (including for wholly owned properties and properties held by the JV) as of September 30, 2025:
|
Year of Lease Expiration (1) |
Number of |
Leased Square |
Percentage of |
Annualized |
Percentage |
Annualized |
||||||||||||||||||
|
2025 |
3 |
248,912 |
2.4 |
% |
$ |
8,814,154 |
2.4 |
% |
$ |
35.41 |
||||||||||||||
|
2026 |
5 |
377,030 |
3.7 |
% |
13,984,837 |
3.7 |
% |
37.09 |
||||||||||||||||
|
2027 |
10 |
538,438 |
5.3 |
% |
20,021,541 |
5.3 |
% |
37.18 |
||||||||||||||||
|
2028 |
12 |
807,610 |
7.9 |
% |
18,138,687 |
4.8 |
% |
22.46 |
||||||||||||||||
|
2029 |
10 |
757,363 |
7.4 |
% |
24,903,154 |
6.6 |
% |
32.88 |
||||||||||||||||
|
2030 |
4 |
67,202 |
0.7 |
% |
1,741,048 |
0.5 |
% |
25.91 |
||||||||||||||||
|
2031 |
8 |
442,851 |
4.3 |
% |
16,736,280 |
4.5 |
% |
37.79 |
||||||||||||||||
|
2032 |
11 |
712,188 |
7.0 |
% |
22,330,286 |
6.0 |
% |
31.35 |
||||||||||||||||
|
2033 |
10 |
566,197 |
5.5 |
% |
22,379,733 |
6.0 |
% |
39.53 |
||||||||||||||||
|
2034 |
10 |
507,793 |
5.0 |
% |
21,206,069 |
5.7 |
% |
41.76 |
||||||||||||||||
|
Thereafter |
59 |
5,177,760 |
50.8 |
% |
204,602,081 |
54.5 |
% |
39.52 |
||||||||||||||||
|
Total / Weighted Average |
142 |
10,203,344 |
100.0 |
% |
$ |
374,857,870 |
100.0 |
% |
$ |
36.74 |
||||||||||||||
(1)
The year of lease expiration is pursuant to current contract terms. Some tenants have the right to vacate their space during a specified period, or "soft term," before the stated terms of their leases expire. As of September 30, 2025, five tenants occupying approximately 1.8% of our leased square feet and contributing approximately 1.6% of our annualized lease income are currently operating under lease provisions that allow them to exercise their right to terminate their lease before the stated term of their respective lease expires.
Information about our development properties as of September 30, 2025 is set forth in the table below:
|
Property Name |
Location |
Tenant |
Property |
Lease Term |
Estimated Leased |
||||||||
|
FDA - Atlanta |
Atlanta, GA |
Food and Drug Administration |
L (1) |
20-year |
162,000 |
||||||||
|
JUD - Flagstaff |
Flagstaff, AZ |
Judiciary of the U.S. Government |
C (2) |
20-year |
50,777 |
||||||||
|
JUD - Medford |
Medford, OR |
Judiciary of the U.S. Government |
C (2) |
20-year |
40,035 |
||||||||
|
FL - Fort Myers |
Fort Myers, FL |
Florida Department of Law Enforcement |
L (1) |
25-year |
64,000 |
||||||||
|
Total |
316,812 |
||||||||||||
(1)
L=Laboratory
(2)
C=Courthouse
Results of Operations
Comparison of Results of Operations for the three months ended September 30, 2025 and 2024
The financial information presented below summarizes our results of operations for the three months ended September 30, 2025 and 2024 (amounts in thousands).
|
For the three months ended September 30, |
||||||||||||
|
2025 |
2024 |
Change |
||||||||||
|
Revenues |
||||||||||||
|
Rental income |
$ |
82,210 |
$ |
72,536 |
$ |
9,674 |
||||||
|
Tenant reimbursements |
1,700 |
663 |
1,037 |
|||||||||
|
Asset management income |
623 |
579 |
44 |
|||||||||
|
Other income |
1,618 |
1,003 |
615 |
|||||||||
|
Total revenues |
86,151 |
74,781 |
11,370 |
|||||||||
|
Expenses |
||||||||||||
|
Property operating |
20,715 |
16,710 |
4,005 |
|||||||||
|
Real estate taxes |
8,814 |
8,000 |
814 |
|||||||||
|
Depreciation and amortization |
28,946 |
23,795 |
5,151 |
|||||||||
|
Acquisition costs |
293 |
600 |
(307 |
) |
||||||||
|
Corporate general and administrative |
5,808 |
4,667 |
1,141 |
|||||||||
|
Provision for (recovery of) credit losses |
302 |
1,260 |
(958 |
) |
||||||||
|
Total expenses |
64,878 |
55,032 |
9,846 |
|||||||||
|
Other income (expense) |
||||||||||||
|
Income from unconsolidated real estate venture |
1,556 |
1,575 |
(19 |
) |
||||||||
|
Interest expense, net |
(19,037 |
) |
(16,209 |
) |
(2,828 |
) |
||||||
|
Impairment loss |
(2,545 |
) |
- |
(2,545 |
) |
|||||||
|
Net income |
$ |
1,247 |
$ |
5,115 |
$ |
(3,868 |
) |
|||||
Revenues
Total revenues increased $11.4 million to $86.2 million for the three months ended September 30, 2025 compared to $74.8 million for the three months ended September 30, 2024.
The $9.7 million increase in Rental income is primarily attributable to the eight operating properties acquired since September 30, 2024 and a full period of operations from the one operating property acquired during the quarter ended September 30, 2024.
The $1.0 million increase in tenant reimbursements is primarily attributable to an increase in tenant project reimbursement.
The less than $0.1 million increase in Asset management income is primarily attributable to the fee earned by us for asset management of the JV from a full period of operations from the one property acquired during the quarter ended September 30, 2024.
The $0.6 million increase in Other income is primarily attributable to an increase in interest income.
Expenses
Total expenses increased $9.8 million to $64.9 million for the three months ended September 30, 2025 compared to $55.0 million for the three months ended September 30, 2024.
The $4.0 million increase in Property operating expenses is primarily attributable to the eight operating properties acquired since September 30, 2024 and a full period of operations from the one operating property acquired during the quarter ended September 30, 2024.
The $0.8 million increase in Real estate taxes is primarily attributable to the eight operating properties acquired since September 30, 2024 and a full period of operations from the one operating property acquired during the quarter ended September 30, 2024.
The $5.2 million increase in Depreciation and amortization is primarily attributable to the eight operating properties acquired since September 30, 2024 and a full period of operations from the one operating property acquired during the quarter ended September 30, 2024.
The $1.1 million increase in Corporate general and administrative is primarily due to an increase in non-cash compensation.
The $1.0 million decrease in Provision for (recovery of) credit losses is primarily due to a downward adjustment to our credit loss allowance for a $15.0 million paydown of Real estate loan receivable and change in market conditions.
Income from unconsolidated real estate venture
The less than $0.1 million decrease in Income from unconsolidated real estate venture is primarily attributable to higher operating expenses partially offset by a full period of operations from the one operating property acquired by the JV during the quarter ended September 30, 2024.
Interest expense, net
The $2.8 million increase in Interest expense, net is primarily attributable to the fixed rate senior unsecured notes issued since September 30, 2024.
Impairment loss
During the quarter ended September 30, 2025, we recognized an impairment loss totaling approximately $2.5 million for our ICE - Otay property in order to reduce its carrying value to its estimated fair value. ICE - Otay is a 52,881 rentable square foot office building located in San Diego, California.
Comparison of Results of Operations for the nine months ended September 30, 2025 and 2024
The financial information presented below summarizes our results of operations for the nine months ended September 30, 2025 and 2024 (amounts in thousands).
|
For the nine months ended September 30, |
||||||||||||
|
2025 |
2024 |
Change |
||||||||||
|
Revenues |
||||||||||||
|
Rental income |
$ |
238,123 |
$ |
215,465 |
$ |
22,658 |
||||||
|
Tenant reimbursements |
4,621 |
4,494 |
127 |
|||||||||
|
Asset management income |
1,867 |
1,680 |
187 |
|||||||||
|
Other income |
4,449 |
2,163 |
2,286 |
|||||||||
|
Total revenues |
249,060 |
223,802 |
25,258 |
|||||||||
|
Expenses |
||||||||||||
|
Property operating |
57,724 |
51,420 |
6,304 |
|||||||||
|
Real estate taxes |
25,257 |
24,072 |
1,185 |
|||||||||
|
Depreciation and amortization |
84,277 |
71,681 |
12,596 |
|||||||||
|
Acquisition costs |
962 |
1,427 |
(465 |
) |
||||||||
|
Corporate general and administrative |
18,830 |
18,032 |
798 |
|||||||||
|
Provision for (recovery of) credit losses |
(475 |
) |
1,478 |
(1,953 |
) |
|||||||
|
Total expenses |
186,575 |
168,110 |
18,465 |
|||||||||
|
Other income (expense) |
||||||||||||
|
Income from unconsolidated real estate venture |
5,218 |
4,367 |
851 |
|||||||||
|
Interest expense, net |
(56,374 |
) |
(45,210 |
) |
(11,164 |
) |
||||||
|
Impairment loss |
(2,545 |
) |
- |
(2,545 |
) |
|||||||
|
Net income |
$ |
8,784 |
$ |
14,849 |
$ |
(6,065 |
) |
|||||
Revenues
Total revenues increased $25.3 million to $249.1 million for the nine months ended September 30, 2025 compared to $223.8 million for the nine months ended September 30, 2024.
The $22.7 million increase in Rental income is primarily attributable to the eight operating properties acquired since September 30, 2024 and a full period of operations from the four operating properties acquired during the nine months ended September 30, 2024.
The $0.1 million increase in Tenant reimbursements is primarily attributable to an increase in tenant project reimbursement.
The $0.2 million increase in Asset management income is primarily attributable to the fee earned by us for asset management of the JV from a full period of operations from the one property acquired during the nine months ended September 30, 2024.
The $2.3 million increase in Other income is primarily attributable to an increase in interest income.
Expenses
Total expenses increased $18.5 million to $186.6 million for the nine months ended September 30, 2025 compared to $168.1 million for the nine months ended September 30, 2024.
The $6.3 million increase in Property operating expenses is primarily attributable to the eight operating properties acquired since September 30, 2024 and a full period of operations from the four operating properties acquired during the nine months ended September 30, 2024.
The $1.2 million increase in Real estate taxes is primarily attributable to the eight operating properties acquired since September 30, 2024 and a full period of operations from the four operating properties acquired during the nine months ended September 30, 2024.
The $12.6 million increase in Depreciation and amortization is primarily attributable to the eight operating properties acquired since September 30, 2024 and a full period of operations from the four operating properties acquired during the nine months ended September 30, 2024.
The $0.8 million increase in Corporate general and administrative is primarily due to an increase in non-cash compensation.
The $2.0 million decrease in Provision for (recovery of) credit losses is primarily due to a downward adjustment to our credit loss allowance for a $15.0 million paydown of Real estate loan receivable and change in market conditions.
Income from unconsolidated real estate venture
The $0.9 million increase in Income from unconsolidated real estate venture is primarily attributable to a full period of operations from the one operating property acquired by the JV during the nine months ended September 30, 2024.
Interest expense, net
The $11.2 million increase in Interest expense, net is primarily attributable to the fixed rate senior unsecured notes issued since September 30, 2024.
Impairment loss
During the nine months ended September 30, 2025, we recognized an impairment loss totaling approximately $2.5 million for our ICE - Otay property in order to reduce its carrying value to its estimated fair value. ICE - Otay is a 52,881 rentable square foot office building located in San Diego, California.
Liquidity and Capital Resources
We anticipate that our cash flows from the sources listed below will provide adequate capital for the next 12 months for all anticipated uses, including all scheduled principal and interest payments on our outstanding indebtedness, current and anticipated tenant improvements, development activities at FDA - Atlanta, JUD - Flagstaff, JUD - Medford and FL - Ft. Myers, planned and possible acquisitions of properties, stockholder distributions to maintain our qualification as a REIT, potential repurchases of common stock under our share repurchase program and other capital obligations associated with conducting our business. At September 30, 2025, we had approximately $4.4 million available in cash and cash equivalents, $9.9 million of restricted cash and there was approximately $229.0 million available under our 2024 revolving credit facility.
Our primary expected sources of capital are as follows:
•
existing cash balances;
•
operating cash flow;
•
distribution of cash flows from the JV;
•
available borrowings under our 2024 revolving credit facility;
•
issuance of long-term debt;
•
issuance of equity, including under our 2021 ATM Program (as described below); and
•
asset sales.
Our short-term liquidity requirements consist primarily of funds to pay for the following:
•
development and redevelopment activities, including major redevelopment, renovation or expansion programs at FDA - Atlanta, JUD - Flagstaff, JUD - Medford and FL - Ft. Myers and other individual properties;
•
property acquisitions;
•
tenant improvements, allowances and leasing costs;
•
recurring maintenance and capital expenditures;
•
debt repayment requirements;
•
commitments to fund advancements through loan receivables;
•
corporate and administrative costs;
•
interest payments on our outstanding indebtedness;
•
interest swap payments;
•
distribution payments; and
•
potential repurchases of common stock under our share repurchase program.
Our long-term liquidity needs, in addition to recurring short-term liquidity needs as discussed above, consist primarily of funds necessary to pay for acquisitions, non-recurring capital expenditures, and scheduled debt maturities. Although we may be able to anticipate and plan for certain of our liquidity needs, unexpected increases in uses of cash that are beyond our control and which affect our financial condition and results of operations may arise, or our sources of liquidity may be fewer than, and the funds available from such sources may be less than, anticipated or required. As of the date of this filing, there were no known commitments or events that would have a material impact on our liquidity.
Equity
ATM Programs
We entered into separate equity distribution agreements on each of December 20, 2019 (the "2019 ATM Program") and June 22, 2021 (the "2021 ATM Program") with various financial institutions. Pursuant to the 2021 ATM Program, we may issue and sell shares of our common stock having an aggregate offering price of up to $300.0 million from time to time in negotiated transactions or transactions that are deemed to be "at the market" offerings as defined in Rule 415 under the Securities Act. Under the 2021 ATM Program, we may enter into one or more forward transactions (each, a "forward sale transaction") under separate master forward sale confirmations and related supplemental confirmations with each of the various financial institutions party to the 2021 ATM Program for the sale of shares of our common stock on a forward basis.
The 2019 ATM Program, which also provided for the issuance and sale of shares of our common stock having an aggregate offering price of up to $300.0 million in "at the market" offerings and forward sale transactions, was terminated on April 30, 2025 and there were no issuances under the 2019 ATM Program during the three and nine months ended September 30, 2025.
The following table sets forth certain information with respect to issuances under the 2021 ATM Program during the nine months ended September 30, 2025 (amounts in thousands, except share amounts):
|
2021 ATM Program |
||||||||
|
For the quarter ended |
Number of Shares Issued (1) |
Net Proceeds |
||||||
|
March 31, 2025 |
1,514,266 |
$ |
40,858 |
|||||
|
June 30, 2025 |
202,721 |
5,315 |
||||||
|
September 30, 2025 |
750,000 |
16,812 |
||||||
|
Total |
2,466,987 |
$ |
62,985 |
|||||
(1) Share amounts have been retrospectively adjusted for all periods presented to reflect the Reverse Stock Split. Shares issued by us, which were all issued in settlement of forward sale transactions. As of September 30, 2025, we had settled all of our outstanding forward sale transactions under the 2021 ATM Program. We accounted for the forward sale transactions as equity.
As of September 30, 2025, we had approximately $236.2 million of gross sales of our common stock available under the 2021 ATM Program.
Share Repurchase Program
On April 28, 2022, our Board of Directors authorized a share repurchase program whereby we may repurchase up to 1,815,597 shares of our common stock (adjusted for the Reverse Stock Split), or approximately 5% of our outstanding shares as of the original authorization date. We are not required to purchase shares under the share repurchase program but may choose to do so in the open market or through privately negotiated transactions at times and amounts based on our evaluation of market conditions and other factors.
No repurchases of shares of our common stock were made under the share repurchase program during the nine months ended September 30, 2025.
Debt
Indebtedness Outstanding
The following table sets forth certain information with respect to our outstanding indebtedness as of September 30, 2025 (amounts in thousands):
|
Principal Outstanding |
Interest |
Current |
|||||||
|
Loan |
September 30, 2025 |
Rate (1)(2) |
Maturity |
||||||
|
Revolving credit facility: |
|||||||||
|
2024 revolving credit facility (3) |
$ |
170,900 |
SOFR + 155 bps |
June 2028 (4) |
|||||
|
Total revolving credit facility |
170,900 |
||||||||
|
Term loan facilities: |
|||||||||
|
2016 term loan facility |
100,000 |
5.36% (5) |
January 2028 (6) |
||||||
|
2018 term loan facility |
200,000 |
5.19% (7) |
August 2028 (8) |
||||||
|
Total term loan facilities |
300,000 |
||||||||
|
Less: Total unamortized deferred financing fees |
(3,029 |
) |
|||||||
|
Total term loan facilities, net |
296,971 |
||||||||
|
Notes payable: |
|||||||||
|
2017 series A senior notes |
95,000 |
4.05% |
May 2027 |
||||||
|
2017 series B senior notes |
50,000 |
4.15% |
May 2029 |
||||||
|
2017 series C senior notes |
30,000 |
4.30% |
May 2032 |
||||||
|
2019 series A senior notes |
85,000 |
3.73% |
September 2029 |
||||||
|
2019 series B senior notes |
100,000 |
3.83% |
September 2031 |
||||||
|
2019 series C senior notes |
90,000 |
3.98% |
September 2034 |
||||||
|
2021 series A senior notes |
50,000 |
2.62% |
October 2028 |
||||||
|
2021 series B senior notes |
200,000 |
2.89% |
October 2030 |
||||||
|
2024 series A senior notes |
150,000 |
6.56% |
May 2033 |
||||||
|
2024 series B senior notes |
50,000 |
6.56% |
August 2033 |
||||||
|
2025 series A senior notes |
25,000 |
6.13% |
March 2030 |
||||||
|
2025 series B senior notes |
100,000 |
6.33% (9) |
March 2032 |
||||||
|
Total notes payable |
1,025,000 |
||||||||
|
Less: Total unamortized deferred financing fees |
(6,360 |
) |
|||||||
|
Total notes payable, net |
1,018,640 |
||||||||
|
Mortgage notes payable: |
|||||||||
|
USFS II - Albuquerque |
8,044 |
4.46% |
July 2026 |
||||||
|
ICE - Charleston |
9,319 |
4.21% |
January 2027 |
||||||
|
VA - Loma Linda |
127,500 |
3.59% |
July 2027 |
||||||
|
CBP - Savannah |
8,015 |
3.40% |
July 2033 |
||||||
|
Total mortgage notes payable |
152,878 |
||||||||
|
Less: Total unamortized deferred financing fees |
(412 |
) |
|||||||
|
Less: Total unamortized premium/discount |
(150 |
) |
|||||||
|
Total mortgage notes payable, net |
152,316 |
||||||||
|
Total debt |
$ |
1,638,827 |
|||||||
(1)
Effective interest rates are as follows: 2016 term loan facility 5.64%, 2018 term loan facility 5.64%, 2017 series A senior notes 4.15%, 2017 series B senior notes 4.23%, 2017 series C senior notes 4.37%, 2019 series A senior notes 3.82%, 2019 series B senior notes 3.91%, 2019 series C senior notes 4.04%, 2021 series A senior notes 2.74%, 2021 series B senior notes 2.99%, 2024 series A senior notes 6.74%, 2024 series B senior notes 6.73%, 2025 series A senior notes 6.36%, 2025 series B senior notes 6.51%, USFS II - Albuquerque 3.92%, ICE - Charleston 3.93%, VA - Loma Linda 3.78%, CBP - Savannah 4.12%.
(2)
At September 30, 2025, the USD SOFR with a five day lookback ("SOFR") was 4.12%. The current interest rate is not adjusted to include the amortization of deferred financing fees or debt issuance costs incurred in obtaining debt or any unamortized fair market value premiums. The spread over the applicable rate for each of our $400.0 million senior unsecured
revolving credit facility (the "2024 revolving credit facility"), our $200.0 million senior unsecured term loan facility (as amended, our "2018 term loan facility") and our $100.0 million senior unsecured term loan facility (as amended, our "2016 term loan facility") is based on our consolidated leverage ratio, as set forth in the respective loan agreements.
(3)
Our $400.0 million senior unsecured revolving credit facility had available capacity of $229.0 million at September 30, 2025, in addition to an accordion feature that provides us with additional capacity of up to $300.0 million, subject to syndication of the increase and the satisfaction of customary terms and conditions.
(4)
Our 2024 revolving credit facility has two six-month as-of-right extension options subject to certain conditions and the payment of an extension fee.
(5)
Our 2016 term loan facility is subject to three interest rate swap with an effective date of December 23, 2024 and a notional value of $100.0 million, which effectively fixes the interest rate at 5.36% annually, based on our consolidated leverage ratio as defined in our 2016 term loan facility agreement.
(6)
Our 2016 term loan facility has two one-year as-of-right extension options subject to certain conditions and the payment of an extension fee.
(7)
Our 2018 term loan facility is subject to three interest rate swaps, of which one has an effective date of March 24, 2025 and two of the swaps have an effective date of June 30, 2025. The three swaps have an aggregate notional value of $200.0 million, which effectively fixes the interest rate at 5.19% annually, based on our consolidated leverage ratio as defined in our 2018 term loan facility agreement.
(8)
Our 2018 term loan facility has two one-year as-of-right extension options subject to certain conditions and the payment of an extension fee.
(9)
We entered into two $50.0 million treasury lock agreements to fix the Treasury rate of our 2025 series B senior notes. For a more complete description of the treasury lock agreements, see Note 7 to the Consolidated Financial Statements.
2016 Term Loan Facility
On January 8, 2025, we entered into the ninth amendment to our senior unsecured term loan agreement, dated as of September 29, 2016, to extend the maturity date of our 2016 term loan facility from January 30, 2025 to January 28, 2028.
2025 Senior Note Agreement
On March 20, 2025, we entered into a master note purchase agreement pursuant to which the Operating Partnership agreed to issue and sell an aggregate of up to $125 million of fixed rate, senior unsecured notes ("Senior Notes") consisting of (i) 6.13% 2025 Series A Senior Notes due March 20, 2030 ("2025 series A senior notes"), in an aggregate principal amount of $25.0 million, and (ii) 6.33% 2025 Series B Senior Notes due March 20, 2032 ("2025 series B senior notes"), in an aggregate principal amount of $100.0 million. The Senior Notes were issued on March 20, 2025. We, together with various subsidiaries of the Operating Partnership, have guaranteed the series A senior notes and the series B senior notes.
2018 Term Loan Facility
On August 21, 2025, we entered into a fifth amendment to our second amended and restated credit agreement, dated as of July 23, 2021, to extend the maturity date of our 2018 term loan facility from July 23, 2026 to August 21, 2028 and upsize lender commitment from $174.5 million to $200.0 million. Further, the Company may exercise, at its discretion, two one-year extension options, subject to certain conditions. Lastly, the Company secured a new accordion feature of $100.0 million, which provides additional capacity subject to syndication of the increase and the satisfaction of customary terms and conditions. In connection with the extension, we recognized an aggregate $0.1 million loss on debt extinguishment during the nine months ended September 30, 2025, which is included in Interest expense, net on our Consolidated Statements of Operations.
Effective September 2, 2025, we amended the credit agreement governing our 2024 revolving credit facility to conform certain definitions related to leverage covenants to the provisions of the 2018 term loan facility.
Effective September 30, 2025, we amended the credit agreement governing our 2016 term loan facility to conform certain definitions related to leverage covenants to the provisions of the 2018 term loan facility.
Our 2024 revolving credit facility, term loan facilities, notes payable, and mortgage notes payable are subject to ongoing compliance with a number of financial and other covenants. As of September 30, 2025, we were in compliance with all applicable financial covenants.
The chart below details our debt capital structure as of September 30, 2025 (dollar amounts in thousands):
|
Debt Capital Structure |
September 30, 2025 |
|||
|
Total principal outstanding |
$ |
1,648,778 |
||
|
Weighted average maturity |
4.4 years |
|||
|
Weighted average interest rate |
4.7 |
% |
||
|
% Variable debt |
10.4 |
% |
||
|
% Fixed debt (1) |
89.6 |
% |
||
|
% Secured debt |
9.2 |
% |
||
(1)
Our 2016 term loan facility and 2018 term loan facility are swapped to be fixed and as such are included as fixed rate debt in the table above.
Material Cash Commitments
On April 1, 2025, the Borrower of the Real estate loan receivable paid off approximately $15.0 million of the outstanding balance of the loan reducing our total commitment. As of the date of this filing the net funded amount of the outstanding loan receivable was $36.1 million and our remaining obligation to fund was $0.5 million. We expect to fund the remaining commitment through the anticipated maturity of the loan on August 31, 2027, dependent on the borrower's election to use the commitments. For a more complete description of the real estate loan receivable, see Note 5 to the Consolidated Financial Statements.
Other than as described above, during the nine months ended September 30, 2025, there were no material changes to the cash commitment information presented in Item 7 of Part II of our Annual Report on Form 10-K for the year ended December 31, 2024.
Unconsolidated Real Estate Venture
We consolidate entities in which we have a controlling interest or are the primary beneficiary in a variable interest entity. From time to time, we may have off-balance sheet unconsolidated real estate ventures and other unconsolidated arrangements with varying structures.
As of September 30, 2025, we had invested $306.5 million in the JV. As of September 30, 2025, we had committed capital, net of return of over committed capital, to the JV totaling $332.9 million and had a remaining commitment of $8.5 million available. None of the properties owned by the JV are encumbered by mortgage indebtedness.
For a more complete description of the JV, see Note 4 to the Consolidated Financial Statements.
Dividend Policy
In order to qualify as a REIT, we are required to distribute to our stockholders, on an annual basis, at least 90% of our REIT taxable income, determined without regard to the deduction for dividends paid and excluding net capital gains. We anticipate distributing all of our taxable income. We expect to make quarterly distributions to our stockholders in a manner intended to satisfy this requirement. Prior to making any distributions for U.S. federal tax purposes or otherwise, we must first satisfy our operating and debt service obligations. It is possible that it would be necessary to utilize cash reserves, liquidate assets at unfavorable prices or incur additional indebtedness in order to make required distributions. It is also possible that our Board of Directors could decide to make required distributions in part by using shares of our common stock.
A summary of dividends declared by the Board of Directors per share of common stock and per common unit (as adjusted to reflect the Reverse Stock Split and Reverse Unit Split) at the date of record is as follows:
|
Quarter |
Declaration Date |
Record Date |
Payment Date |
Dividend (1) |
||||||
|
Q1 2025 |
April 9, 2025 |
May 5, 2025 |
May 17, 2025 |
$ |
0.45 |
|||||
|
Q2 2025 |
July 30, 2025 |
August 13, 2025 |
August 25, 2025 |
$ |
0.45 |
|||||
|
Q3 2025 |
October 23, 2025 |
November 7, 2025 |
November 20, 2025 |
$ |
0.45 |
|||||
(1)
Prior to the end of the performance period as set forth in the applicable LTIP unit award, holders of performance-based LTIP units are entitled to receive dividends per LTIP unit equal to 10% of the dividend paid per common unit. After the end of the performance period, the number of LTIP units, both vested and unvested, that LTIP award recipients have earned, if any, are entitled to receive dividends in an amount per LTIP unit equal to dividends, both regular and special, payable per common
unit. Holders of LTIP units that are not subject to the attainment of performance goals are entitled to receive dividends per LTIP unit equal to 100% of the dividend paid per common unit beginning on the grant date.
Inflation
Substantially all of our leases provide for operating expense escalations. We believe inflationary increases in expenses may be at least partially offset by the operating expenses that are passed through to our tenants and by contractual rent increases. We do not believe inflation has had a material impact on our historical financial position or results of operations.
Cash Flows
The following table sets forth a summary of cash flows for the nine months ended September 30, 2025 and 2024 (amounts in thousands):
|
For the nine months ended September 30, |
||||||||
|
2025 |
2024 |
|||||||
|
Net cash provided by (used in): |
||||||||
|
Operating activities |
$ |
217,263 |
$ |
138,082 |
||||
|
Investing activities |
(257,559 |
) |
(251,247 |
) |
||||
|
Financing activities |
26,701 |
130,433 |
||||||
Operating Activities
We generated $217.3 million and $138.1 million of cash from operating activities during the nine months ended September 30, 2025 and 2024, respectively. Net cash provided by operating activities for the nine months ended September 30, 2025 includes $111.0 million related to the change in tenant accounts receivable, prepaid expenses and other assets, real estate loan interest receivable, deferred revenue associated with operating leases, principal payments on operating lease obligations, and accounts payable, accrued expenses and other liabilities, $91.1 million in net cash from rental activities net of expenses and $15.2 million related to distributions from investment in unconsolidated real estate venture. Net cash provided by operating activities for the nine months ended September 30, 2024 includes $78.5 million in net cash from rental activities net of expenses, $48.5 million related to the change in tenant accounts receivable, prepaid expenses and other assets, real estate loan interest receivable, deferred revenue associated with operating leases, principal payments on operating lease obligations, and accounts payable, accrued expenses and other liabilities and $11.1 million related to distributions from investment in unconsolidated real estate venture.
Investing Activities
We used $257.6 million and $251.2 million in cash for investing activities during the nine months ended September 30, 2025 and 2024, respectively. Net cash used in investing activities for the nine months ended September 30, 2025 includes $179.4 million in real estate acquisitions and deposits, $58.1 million in additions to development properties, $25.0 million in additions to operating properties and $14.0 million in investment in real estate loan receivable, net, offset by $15.5 million in repayments of real estate loan receivable and $3.5 million in proceeds from sales or rental property, net. Net cash used in investing activities for the nine months ended September 30, 2024 includes $79.3 million in additions to development properties, $73.5 million in real estate acquisitions and deposits, $40.1 million in investments in unconsolidated real estate venture, $31.5 million in investment in real estate loan receivable, net and $29.0 million in additions to operating properties, offset by $2.0 million in distributions of capital from unconsolidated real estate venture.
Financing Activities
We generated $26.7 million and $130.4 million in cash from financing activities during the nine months ended September 30, 2025 and 2024, respectively. Net cash generated in financing activities for the nine months ended September 30, 2025 includes $125.0 million in note payable issuances, $63.6 million in gross proceeds from issuance of shares of our common stock and $25.5 million in term loan proceeds, offset by $103.7 million in net paydowns under our 2024 revolving credit facility, $72.9 million in dividend payments, $4.8 million in deferred financing costs, $3.4 million in mortgage notes payable repayment, $1.9 million in treasury lock settlement and $0.7 million in the payment of offering costs. Net cash generated by financing activities for the nine months ended September 30, 2024 includes $200.0 million in note payable issuances, $70.6 million in net draws under our revolving credit facility and $43.4 million in gross proceeds from issuance of shares of our common stock, offset by $86.4 million in dividend payments, $63.2 million in mortgage notes payable repayment, $25.5 million in term loan repayments, $7.8 million in deferred financing costs and $0.6 million in the payment of offering costs.
Non-GAAP Financial Measures
We use and present Funds From Operations ("FFO") and Core FFO as supplemental measures of our performance. The summary below describes our use of FFO and Core FFO and provides information regarding why we believe these measures are meaningful supplemental measures of our performance and reconciles these measures from net income, presented in accordance with GAAP.
Funds From Operations and Core Funds From Operations
FFO is a supplemental measure of our performance. We present FFO calculated in accordance with the current National Association of Real Estate Investment Trusts ("Nareit") definition set forth in the Nareit FFO White Paper - Restatement 2018. FFO includes the REIT's share of FFO generated by unconsolidated affiliates. In addition, we present Core FFO for certain other adjustments that we believe enhance the comparability of our FFO across periods and to the FFO reported by other publicly traded REITs. FFO is a supplemental performance measure that is commonly used in the real estate industry to assist investors and analysts in comparing results of REITs.
FFO is defined by Nareit as net income (calculated in accordance with GAAP), excluding:
•
Depreciation and amortization related to real estate.
•
Gains and losses from the sale of certain real estate assets.
•
Gains and losses from change in control.
•
Impairment write-downs of certain real estate assets and investments in entities when the impairment is directly attributable to decreases in the value of depreciable real estate held by the entity.
We present FFO because we consider it an important supplemental measure of our operating performance, and we believe it is frequently used by securities analysts, investors and other interested parties in the evaluation of REITs, many of which present FFO when reporting results.
We adjust FFO to present Core FFO as an alternative measure of our operating performance, which, when applicable, excludes items which we believe are not representative of ongoing operating results, such as liability management related costs (including losses on extinguishment of debt and modification costs), catastrophic event charges, depreciation of non-real estate assets, recovery of credit losses and the unconsolidated real estate venture's allocated share of these adjustments. In future periods, we may also exclude other items from Core FFO that we believe may help investors compare our results. We believe Core FFO more accurately reflects the ongoing operational and financial performance of our core business.
FFO and Core FFO are presented as supplemental financial measures and do not fully represent our operating performance. Other REITs may use different methodologies for calculating FFO and Core FFO or use other definitions of FFO and Core FFO and, accordingly, our presentation of these measures may not be comparable to other REITs. Neither FFO nor Core FFO is intended to be a measure of cash flow or liquidity. Please refer to our financial statements, prepared in accordance with GAAP, for purposes of evaluating our financial condition, results of operations and cash flows.
The following table sets forth a reconciliation of our net income to FFO and Core FFO for the three and nine months ended September 30, 2025 and 2024 (amounts in thousands):
|
For the three months ended September 30, |
For the nine months ended September 30, |
|||||||||||||||
|
2025 |
2024 |
2025 |
2024 |
|||||||||||||
|
Net income |
$ |
1,247 |
$ |
5,115 |
$ |
8,784 |
$ |
14,849 |
||||||||
|
Depreciation of real estate assets |
28,695 |
23,543 |
83,523 |
70,926 |
||||||||||||
|
Impairment loss |
2,545 |
- |
2,545 |
- |
||||||||||||
|
Unconsolidated real estate venture allocated share of above adjustments |
2,282 |
1,976 |
6,841 |
5,984 |
||||||||||||
|
FFO |
34,769 |
30,634 |
101,693 |
91,759 |
||||||||||||
|
Adjustments to FFO: |
||||||||||||||||
|
Loss on extinguishment of debt and modification costs |
241 |
2 |
1,141 |
260 |
||||||||||||
|
Provision for (recovery of) credit losses |
302 |
1,260 |
(475 |
) |
1,478 |
|||||||||||
|
Natural disaster event expense, net of recovery |
44 |
7 |
114 |
(1 |
) |
|||||||||||
|
Depreciation of non-real estate assets |
251 |
252 |
754 |
755 |
||||||||||||
|
Unconsolidated real estate venture allocated share of above adjustments |
16 |
17 |
49 |
50 |
||||||||||||
|
Core FFO |
35,623 |
32,172 |
103,276 |
94,301 |
||||||||||||
Critical Accounting Estimates
The preparation of financial statements in conformity with GAAP requires management to use judgment in the application of accounting policies, including making estimates and assumptions. We base these estimates, judgments, and assumptions on historical experience, current trends, and various other factors that we believe to be reasonable under the circumstances. If our judgment or interpretation of the facts and circumstances relating to various transactions had been different, or different assumptions were made, it is possible that different accounting policies would have been applied, resulting in different financial results or a different presentation of our financial statements.
Our Annual Report on Form 10-K for the year ended December 31, 2024 contains a discussion of our significant accounting policies, which utilize relevant critical accounting estimates. During the nine months ended September 30, 2025, there were no material changes to the discussion of our significant accounting policies included in our Annual Report on Form 10-K for the year ended December 31, 2024.
Easterly Government Properties Inc. published this content on October 27, 2025, and is solely responsible for the information contained herein. Distributed via Edgar on October 27, 2025 at 20:32 UTC. If you believe the information included in the content is inaccurate or outdated and requires editing or removal, please contact us at [email protected]