DEA

Image source: The Motley Fool. Monday, Aug. 3, 2026 at 11 a.m. ET Director of Investor Relations - Cole Bardawill President and Chief Executive Officer - Darrell Crate Chief Financial Officer - Allison Marino Operator: Greetings. Welcome to the Easterly Government Properties Second Quarter 2026 Earnings Conference Call. [Operator Instructions]. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Cole Bardawill, Director of Investor Relations. Please go ahead. Cole Bardawill: Good morning. Before the call begins, please note that certain statements made during this conference call may include statements that are not historical facts and are considered forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Although the company believes that its expectations as reflected in any forward-looking statements are reasonable, it can give no assurance that these expectations will be attained or achieved. Furthermore, actual results may differ materially from those described in the forward-looking statements and will be affected by a variety of risks and factors that are beyond the company's control, including, without limitation, those contained in the company's most recent Form 10-K filed with the SEC and in other SEC filings. The company assumes no obligation to update publicly any forward-looking statements. Additionally, on this conference call, the company may refer to certain non-GAAP financial measures such as funds from operations, core funds from operations and cash available for distribution. You can find a tabular reconciliation of these non-GAAP financial measures to the most comparable current GAAP numbers in the company's earnings release and separate supplemental information package on the Investor Relations page of the company's website at ir.easterlyreit.com. I would now like to turn the conference call over to Darrell Crate, President and CEO of Easterly Government Properties. Darrell Crate: Thanks, Cole. Good morning, everyone. This quarter, we delivered year-over-year core FFO per share growth of 5.4% and as many of you know, this is above our 2% to 3% stated long-term growth target and we are pleased and achieved these results by executing our strategy of growing earnings steadily, allocating capital thoughtfully and improving the quality of the portfolio over time. While the current interest rate environment hasn't improved, driven in part by the volatility of geopolitical conditions that we're currently facing, our business moves forward steadily in periods like this as evidenced by our improved earnings guidance. We own facilities that support essential government missions leased to critical federal agencies high credit state and municipal tenants and defense-related companies. These leases are long duration, impacted primarily by the full facing credit of the U.S. government. We continue to communicate to investors that we are clearly differentiated from traditional office real estate. Many of our facilities include secure, purpose-built environments where sensitive government work is conducted, they are mission-specific, difficult to replicate and essential to the agencies they serve. For example, we recently visited our U.S. District Courthouse in Charleston, South Carolina. The building sits at the city's historic four corners of law physically connected to the adjoining Federal Judicial Center deeply embedded into both the operations of the federal judiciary and the fabric of downtown Charleston, it's a clear example of the tenant stickiness that runs throughout our portfolio, facilities that are integral to the missions they serve and the communities they anchor. Turning to the quarter. The portfolio continues to perform well. Occupancy stood at 98% and our weighted average lease term stands at 9.2 years. Both of these key metrics compare quite favorably to our office REIT peers, and each reflects the quality of our assets, the mission-critical work happening inside them and the durability of the portfolio's cash flows. During the quarter, we closed a new 5-year term loan facility. Allison will cover the details, but I'd note that in a selective lending environment, we executed efficiently and on attractive terms. We view that as a reflection of how lenders see the business, high-quality cash flows derived from government-backed income, supporting a disciplined strong balance sheet. As part of our growth plan, we also continue to have ongoing conversations with the rating agencies and we look forward to updating you on our progress as we work towards an additional investment-grade rating in 2027. Turning to our cost of capital. our shares have performed well year-to-date, and the improvement supports our ability to grow. As our equity continues to re-rate, reflecting the quality and consistent growth of our FFO relative to peers, we will be able to harvest more opportunities across our $1.5 billion pipeline. Even at current levels, we're beginning to see opportunities to fund external growth on an accretive basis. As the stock price improves, more of that pipeline meets our return thresholds. We spent the last several years building this pipeline, and we will hopefully look to begin converting it in the coming quarters. Based on our continued operational performance and successful capital markets execution, we are raising our full year core FFO per share guidance range. The increase reflects the strength of our business and our confidence in delivering another year of steady growth against our stated objectives. We continue to remain focused on disciplined execution prudent capital allocation and creating long-term value for our shareholders. As we look ahead, we couldn't be more excited about the opportunities in front of us. Over the past several years, we've remained focused on executing our strategy, strengthening the portfolio and positioning the company for consistent long-term growth. We're encouraged to see that, that execution increasingly reflected in our market valuation, and we believe we remain in the early innings of unlocking the value embedded within our platform. We appreciate the dedication of our team and the continued support of our tenants and shareholders, and we look forward to building on this momentum through the rest of the year. And with that, I'll turn the call over to Allison. Allison Marino: Thanks, Darrell, and happy Monday, everyone. I'm pleased to report the financial results for the second quarter of 2026. The underlying growth of the business continues to come through clearly in the numbers. Total revenue for the quarter was $92.4 million, up from $84.2 million in the second quarter of 2025. That's an increase of 10% year-over-year, and it was driven by several factors. The acquisitions and development we've completed over the past 12 months, lease renewals and TI and BAC income coming online. EBITDA grew alongside revenue coming in at $58.4 million for the quarter versus $54.3 million in the second quarter of 2025, approximately 8% growth. And importantly, that growth is reaching the bottom line on a per share basis. For the quarter, net income was $0.07 per share on a fully diluted basis FFO per share was $0.78, up from $0.74 in the prior year. Core FFO per share as well came in at $0.78, up from $0.74 in the prior year. That is approximately 5% growth year-over-year for both metrics. And finally, cash available for distribution for the quarter was approximately $25.8 million. In terms of our active development projects, all three continue to progress nicely. Our FDL lab facility in Fort Myers, Florida, the U.S. Courthouse and Flagstaff, Arizona, and the U.S. Courthouse in Medford, Oregon are all advancing and we're confident these will be high-quality mission-critical additions to the portfolio once delivered. We initially broke ground on our FDL lab facility in August of 2025. And our team and development partners have done an excellent job executing against the construction time line and keeping the project on track with delivery later this year. Our net debt to annualized quarterly EBITDA currently stands at 7.3x, down from the first quarter as we continue to make steady progress towards our deleveraging targets. As our development projects advance, agreed upon lump sum reimbursements will provide a natural source of deleveraging followed by incremental EBITDA growth as projects are delivered and lease revenues commenced. These factors are an important step towards our medium-term leverage objectives and our pursuit of additional investment-grade ratings, which we believe will enhance access to attractively priced debt capital and support future pipeline funding. The term loan was an excellent outcome for the company. We secured a new $200 million facility with a 5-year maturity and the $50 million Accordion feature at pricing that was better than we initially had anticipated for a comparable long-term capital solution. With an initial spread of 130 basis points over SOFR, we believe the financing reflects both the continued strengthening of the business and the quality of the relationships we've built with our lending group. We used the proceeds to pay down our revolving credit facility, which increased our available liquidity and provides additional capacity to fund future growth opportunities. With the successful closing of the term loan during the quarter, we are raising our full year core FFO per share guidance range by $0.01 at the midpoint from $3.09 to $3.10 and resulting in a revised full year range of $3.07 to $3.13. Despite a challenging interest rate environment, our portfolio continues to perform better than expected, supporting confidence in our earnings outlook for the balance of the year. At the midpoint, our guidance assumes that we will have $50 million to $100 million of gross development-related investment during the year and $50 million in wholly-owned acquisitions. We continue to maintain a $1.5 billion acquisition and development pipeline. And with the recent improvement in our share price, we believe we are approaching an inflection point where we can begin to unlock opportunities from that pipeline in a meaningful way over the coming quarters. We remain focused on disciplined capital allocation, maintaining the strength of our tenant relationships and advancing opportunities across our development and acquisition pipeline. Consistent execution in these areas continues to support the resilience of our cash flows and positions us to create long-term value for shareholders. Thank you for your time this morning. We appreciate your partnership and look forward to updating you on our progress. With that, I will now turn the call back to Shannon. Operator: [Operator Instructions]. Our first question comes from the line of Seth Bergey with Citi. Seth Bergey: I just wanted to dig in a little bit more on kind of the acquisition pipeline and reaching kind of an inflection point as your share prices have moved upwards, how should we just think about kind of the cadence of maybe starting to unlock some of those opportunities as we move into the back half of the year and into next year? Darrell Crate: Yes. I mean I think as Allison says, we're really approaching a level where again, getting dollars put to work at a sort of 100 basis point premium to our cost of capital is achievable. And Seth, as we've spoken, I mean, our company is small. So the great news is that -- it doesn't take much for us to be able to make a material difference, and we've been managing Mike Ibe and Chris Wang have been developing, managing, nurturing, cultivating this $1.5 billion pipeline for the last couple of years as we've continued execute on this on our growth strategy successfully. And we will find things that are able to pop out of that if the stock 2,450 to 2,550 gets us into a nice range where we can -- where we have some opportunity to work some nice transactions at '26, '27. You can start seeing material -- sort of material movement being a couple of hundred million bucks of solid growth. And at the '28, '29, '30, I think we could see very material acquisition volume well in excess of anything that we've done historically. So the optimism is bred by what's within our control today and what we know we can execute on for us to continue to grow forward. And as we all know, Allison won't let me release 2027 earnings guidance. But as we continue to look to move forward, I'm very confident that we have the resources to continue to deliver our long-term growth target to investors. Seth Bergey: And then maybe just a quick follow-up on that. But last quarter, you announced mezzanine financing opportunities. Just of the $1.5 billion, is there any color you can kind of give around kind of maybe some of the size of those deals and then how much would be development opportunities versus acquisitions or any additional mezzanine financing you look to do? Allison Marino: Yes. I think we shared last quarter -- hey, Seth by the way, I think we shared last quarter that the program could grow to be somewhere between $30 million and $50 million. And that is still the target that we were working towards today. Certainly, that pipeline includes additional mezzanine financing opportunities. Many are in the final stages of lease procurement. So our participation in them would be contingent on those lease awards being made. But as we've shared before, there's another batch of particularly VAs coming off the pipeline, and we expect the acquisition activity there and the mezzanine financing activity there to accelerate over the coming years. Darrell Crate: And maybe for some folks who may not be aware, I mean, our mezzanine program, since we announced that as part of our earnings growth strategy, to say we've been flooded with opportunities that would maybe even be an understatement. But our discipline out of those is really just to provide mezzanine financing with developers and folks who we know are trusted and are known to us. and in particular, have buildings that we want to be -- that we want to have as part of our portfolio. So it's a very nice bridge as our cost of capital continues to improve, both on the equity side and the debt side to be close to some projects that we think can be very accretive to the portfolio over the long term. Operator: Our next question is from Michael Lewis of Truth Securities. Michael Lewis: So Allison, you didn't mention any need for equity when you talked about getting into your target leverage range. And then Darrell did talk about equity a little on a question about acquisitions. How accretive it would be at certain levels. I was just wondering, how do you think about your cost of equity? Do you look at NAV? Is it really just more of matching it up with acquisitions and making it accretive. How do you kind of value the cost of equity in the stock? Allison Marino: Sure. So it's a few points. I would say, first and foremost, we primarily match equity against acquisition capital. So that timing may not always be a perfect science. As you saw, we raised some equity in Q2. That was to fund the acquisition from Q1. And that equity was raised at a higher price than we underwrote the deal at. So we're really pleased with how that was matched. In terms of the impact of leverage and equity combined, we see a natural deleveraging path with just the development deliveries that we have. And with that, there is not a need to raise additional equity in order to meet those targets that we are mindful of all of our goals in concert with each other, and we will make the best decision, both from an accretion perspective, a leverage perspective and all in relative in relation to NAV as well. Michael Lewis: Okay. Great. And then my second question, the Loma Linda mortgage matures next summer $127.5 million at 3.6%. I know it's early, is there any sense of how you'll recapitalize that and maybe what the cost could be? Allison Marino: Sure. So as Darrell has shared and we've shared over a couple of calls, we believe that we are on a path to an investment-grade rating, an investment-grade issuance would be our primary goal in terms of refinancing that mortgage. As you know, we prefer to be an unsecured borrower, so that would make a very attractive cost of capital on an unsecured basis. That being said, and while we won't stand still, we have ample capacity on the revolver now, take it on until we find the most attractive long-term debt capital solution. So that's assuming we don't do anything but stand still, we can certainly take it on the revolver. Darrell Crate: Yes. And I think one of the -- as we -- obviously, it's a quarterly conference call. But as we're looking ahead, we've been doing a significant amount of planning around '27, '28, '29, understanding the leases that are going to make a big difference there, trying to get the structure of those leases in a way that we think will be most favored by the public markets. And on the debt side, Allison did a fabulous job getting these term loans in place. But as we look out at our refinancings and we see the opportunities in the debt markets, I think that we are planning well ahead in order to absorb refinance and continue to be on the growth path that we've articulated again, which is a strong 2% to 3% of growth consistently over the long term. And we think we could even step that up if we get our ratings and continue to move forward. Michael Lewis: Okay. And then lastly for me, we noticed a little bit higher maintenance CapEx this quarter. So I was just wondering if there was anything like one-off or any reason for that? Allison Marino: No. We had some very fortunate weather in the spring. So as you can imagine, Q1 tends to be a little light with the winter weather. And this quarter was very active in terms of the external-facing projects, things like roofs or parking lot or HVAC equipment that sits exterior to the building. We are still anticipating that our full year general range of $1.50 to $2 a square foot will be the plan for the year, but there's obviously some seasonality in the numbers as well. Operator: Our next question is from John Kim of BMO Capital Markets. John Kim: I wanted to ask about your $1.5 million acquisition and development pipeline and how that has evolved from the last time you provided that update. Did the window close on some of these transactions and new one have entered that pool? And if you can maybe comment on the rationale for passing up on some of the opportunities during the quarter. Darrell Crate: I mean I think the pipeline continues to remain surprisingly stable given its size. There are seller expectations. I think we're a very good buyer for a bunch of reasons. Many of the folks who own these buildings, the idea of having the opportunity to do some more tax planning with us relative to others I don't think they feel like the market is in a place where they need to sell right now, so there isn't that level of urgency. And we do continue to probably rotate I'm going to say $100 million to $200 million of opportunity within that pipeline within the quarter. There's one deal that we did end up passing on I think we were in a place. It was a fine building. It wasn't a building that was like a have to have for us and -- it was probably 60 to 75 basis points above our cost of capital. And so we decided to pass on that as we have very strong earnings growth right now. We're positioning ourselves for next year. But we're very excited to continue to execute on what we're identifying with some really terrific opportunities. John Kim: And of those potential opportunities that you may close on the next few months or, I guess, for the remainder of the year, can you provide some commentary on what that looks like between GSA and government adjacent assets or maybe more state-level investments? And how much of that is acquisitions versus development opportunities? Darrell Crate: Yes. I mean I think we're seeing some GSA assets that we're excited about, and they're sort of at the forefront of what we're doing. Our hope is, again, if we could control the world, we'd probably do half GSA and half sort of in the alternative bucket as we know. Our goal is to get to 30% of the portfolio being either in state, local or government adjacent. Why is that number important? The number is important because those have escalators of 2% to 3%. So the idea of adding 60 to 90 basis points to our same-store growth rate we think positions the portfolio very nicely relative to peers. And we believe the stability of our cash flow is the mission-critical nature of our buildings should put us at a premium to those businesses. As I've said on prior calls, our portfolio is outstanding. I mean, of the buildings that we have, the duration of the leases, the quality of the cash flow, the occupancy, the tenancy. And I think what we're really working on is packaging those cash flows in a way, and that means packaging is in obtaining the lowest cost of capital. It means giving a growth rate that's strong to investors. It's creating a tremendous level of cushion in the dividend and giving us that reinvestment opportunity, all of which, I think, should make us comp out relative to peers in a way that gives us a multiple on the stock that can be very attractive to our investors and to potential sellers of building. John Kim: And how are you thinking about dispositions as a funding source potentially because they may have re-leasing risk down the road? Or due to the focus on keeping your average portfolio age young versus... Darrell Crate: I think it's all of those things. And to be very candid about it. And I know we've sort of -- we've shared this with you a little bit in the past. I mean these last 2, 3 years, Allison, myself the team, Nick Nimerala and the whole asset management team have really cleared up any of the fog or lack of clarity that's around the portfolio. We've got a lot of conviction on where we are. We will look at things on a case-by-case basis. And sometimes we're really working to find efficiencies. So even if we have a high-quality building, but maybe it's a loaner and certain -- and away from the other asset management resources that are really working for us, that might be a reason to sell. But I don't think -- you're not going to see a significant portfolio turnover for us to go and raise cash to grow. And we continue to work and develop relationships with joint venture partners. So I think we're optimistic that our stock price is going to get into a good place, and we can continue to harvest the pipeline -- that said, pivoting toward the end of this year or the beginning of next year, if we don't -- if that's not going to be the case, we can work on joint ventures with folks with more attractive cost of capital. Because we are the chosen partner of the U.S. government. We're the largest landlord to the U.S. government. We're working very closely from top to bottom with the GSA and with the other agencies. We understand what they need, and we are helping them become more efficient, and we're working on their most important quality buildings in order to be a good partner. So all of that said, for us to go find money that's either in the U.S. or around the globe, that wants to invest in these very high-quality assets that essentially deliver AA plus rent streams, we're a partner of choice for somebody. So we don't have a concern about not having the cost of capital when we need it in order to grow the company. And as I said, our company is tiny today. I mean in the -- with it being worth $1 billion to $2 billion to grow that in a way that's competitive to peers does not take a tremendous amount of have sort of good luck for things to low our way. We're still in a place -- in a size where we can control that growth and deliver it to shareholders with consistency. Operator: Our next question is from RJ Milligan of Raymond James. R.J. Milligan: I just wanted to maybe follow up on the investment pipeline question and maybe ask it a little bit differently. But based on your comments that more things are starting to [ PEs ]. I'm just curious if there's a mix component to that of is it that more development deals are starting to pencil and we should expect if you guys announced more investment activity that we've seen on the development side? Or is it acquisitions? I'm just curious at different levels and different pricing, should we expect a different mix of investment activity? Darrell Crate: I think there's nothing that's completely discernible other than there are two dynamics that are happening. One, in the development world, you can see that we're finding these sort of veins of advantage. You see it with courthouses. I mean, we're building one in Flagstaff, we're building one in Medford. We're good at this. We know how to work with the government, we know how to make the process more efficient and courts are prickly animals. So you can develop a definable edge in that space as a developer. Because pleasing the judges, pleasing the various agencies that are in those buildings is a skill. And so you're seeing an advantage there in Florida. I think that we've done a terrific job with this business. Florida is a fast-growing state. Their law enforcement is important to them. and they have other facilities that need to be built, and we'd be thrilled to be the state of Florida partner in order to do that. On the acquisition side, it's a little trickier. And again, I can't say enough that our small denominator being a smaller company is really our friend because we can continue to find opportunities in buildings where we have an advantage as a buyer because we're a long-term holder of product. Then what does that mean? That means that if there are buildings that may not be well suited to be flipped in 5 years by an institutional buyer, but they're core to what we do. we're going to be able to get those at an attractive price. And those buildings like that, I mean I've got them in my head, so maybe I'm not describing them with words on the call as clear as I'd like to those buildings pencil for us, where we are, and those are with very high-quality agencies where we have a terrific relationship. And I think that, that puts us in some good stead, and we hope that we can get a couple of those in the next 9 months. R.J. Milligan: Great. And just a separate question here. Any -- and this is more modeling, but any update on the expected FAA move out expected in October. Allison Marino: So we -- at this point, they will stay through at least the end of the lease term. Their notice provisions have expired. So they will be -- they're definitely through the end of October. We're hoping for a better update on their moving process over the next month or so. These operations aren't always as streamlined in terms of moving as you and I might be moving in our own homes. So we should have an update for you, but they have historically had a bit of a move out on time challenge. So we're optimistic that they may stay a little bit longer, but we don't have anything concrete to share. Darrell Crate: So maybe just to punch that right down I would not add additional revenue in your model at this time. We do know they will stay to the end of the term, but we may be able to share some -- it's only -- it's either going to be status quo or we're going to have a little optimism to share with you on our next call. Operator: Our next question is from Michael Carroll of RBC Capital Markets. Michael Carroll: Darrell, I wanted to circle back on your comments on your investment pipeline and your -- I guess the ideal mix, I believe you said was 50% GSA type buildings and 50% alternative type assets. I mean can you kind of give us an idea of are the cap rates the same for those type 2 types of buildings? I know the alternatives have the lease bumps or -- how should we think about the pricing ranges of those types of properties? Darrell Crate: Yes. No, I mean, it's a great question. It really is case by case. I mean we're looking at some of these development deals with escalators -- and thus, the individual opportunities are complicated. And some of them we have, we can find an advantage and really are excited to get that capital put to work. And then on acquisitions, again, it's finding unique circumstances where our cost of capital gets us to a point where we get a high-quality building. So when I say 50-50, what I mean is we're working on opportunities equally that are acquisition and development, how it actually shakes out in a set of ways doesn't matter. Volume does matter. Again, our long-term growth targets getting to that 3% number is very important. And we feel like we have the resources not only with the existing portfolio, the lease renewals, all the good work that we have done to get things buffed up and ready and predictable. And in addition to where our cost of capital is today and with regard to this very large pipeline that we continue to navigate, we're going to get to a place where I think our long-term goals are achievable. R.J. Milligan: Okay. And then circling back to your comments about potentially accessing the JV market if you don't like your -- I guess, if you don't want to issue equity fund some of these deals. Are you in discussions with potential JV type funds that wanted to invest with you guys to buy some of these properties? Darrell Crate: Yes. We maintain a series of those relationships, and we've continued to develop them over the last 6 months. As we look forward, I think that we've always had a very large sovereign wealth fund who's been a very good partner but we found some other folks who nicely complement that as we have a broader range of properties that we're interested in, I think we can appeal to a wider range of taste preferences, as we work with folks. And I can say, clearly, we -- I mean, obviously, we've been at this for the better part of 15 years. We are one of the largest in the space, and we are close with -- we understand not only the commercial part of real estate, but how government works. So if you're a JV partner, and this is exposure that you want in your portfolio, we do make it an easy choice for them. So we'll continue to cultivate those relationships. And also given the order of magnitude of the pipeline that we're developing, we don't need to be a ball-hog about it. We can be a very good partner with some JVs as well as doing things on our own and continue to grow the business in a way that I think is going to be pleasing to investors. R.J. Milligan: Okay. And with these JV type investments, is it more of a one-off type deal with specific JV partners? Or could you create or would you want to create more of a fund type business to kind of actively grow relationship and buy new assets? Darrell Crate: I think a fund is a little sort of more formal, but with the VAs, we had a program with our JV partner, where we ended up putting close to $600 million, $700 million of asset in that entity. And that was a terrific program for them and fill the need and it's something that we do well. So thinking about -- again, I don't think -- when you say one-off that doesn't feel like what's accurate because it's really a waste of everybody's time to build the level of relationships that we're looking to have with JV partners. We're not coming up with a building and like auctioning it off. These are partners who I think are excited to be in this space, and we want to do something that's fairly programmatic and consistent over time. That also said, to be an investment-grade issuer we would like to have more than $300 million of debt that we're issuing every year. That is also achievable. And in the context of trying to drive volume, especially as cost of capital gets a little bit better. We will weigh all of that as factors in how we decide to execute. Operator: Our next question is from Merrill Ross of Compass Point Research and Trading. Merrill Ross: If you had an update on the lease expirations aside from the FAA, I know they're pretty light for this year, but are you starting to look towards next year? And then I guess, a peak in 2028. So you may dilute that with growth but it becomes more meaningful and further out and go. I'm just wondering if any update kind of more in the near term, but are you starting to look towards the intermediate Allison Marino: Yes. Mel, thanks for the question. So we are in the happy stages of procurement for upcoming expirations going through most months of 2027. So procurements have kicked off for many, if not all, and we are actively participating in those. We hope to share a little bit more progress as we get closer to those completions. But we're not expecting anything out of line with our currently forecasted renewal expectations, mid- to high-teens net effective rent growth. about $35 a square foot in TI and B stack on average. That being said, I know you mentioned that we've got a lot in '28, we're generally about 5% of expirations in any given year. And if you look at 2030, the golden year for all of us, there's like less than 1%. So it's going to be a very happy year to talk about on earnings calls because I don't know we'll talk about, but not only hopefully something else pretty cool. But we're underway and I hope to share some more progress in Q3. Darrell Crate: Yes. And then I'd just say, I mean, to put some color around it, Allison has done a tremendous job of putting more organization and discipline around getting these procurements going. It's been a broad executive team effort to work more closely with the government and figure out DOGE was our friend. In this respect because it did open people's eyes to having a more fresh look on how they process things. We have very important buildings to them. And the reality being they should be renewing these leases. We've done a very good job as a landlord. These are mission-critical facilities. So they shouldn't be -- we shouldn't be wasting a lot of time dickering around with the leases. And getting to a place where we can streamline the process where the American taxpayers are getting a fair deal. Our shareholders are getting fairly compensated for their capital. Everybody from our elected officials to the folks at the agencies to the GSA to us, nobody disagrees with that framework. And so getting that to move more smoothly has been an effort, and Allison has absolutely done her part with the team internally to post up to the agencies, the government and the elected officials in a way that I think everybody is pleased with how it's going. Operator: Thank you. I would now like to turn the conference back to Darrell Crate, President and CEO of Easterly Government Properties for closing remarks. Darrell Crate: Great. Well, thanks, everybody, for joining us for this conference call. We're very pleased with how the portfolio continues to move forward. As you know, we're executing on this long-term growth plan, it is terrific to see the team continue to do their work, and I'd really just like to thank our new shareholders and folks who have been with us for also for quite some time. Thank you for your support and confidence, and we really look forward to continuing to deliver strong growth to you in the coming quarters and years. 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Don't miss the latest top 10 list, available with Stock Advisor, and join an investing community built for the long haul. See the 10 stocks » *Stock Advisor returns as of August 10, 2026. This article is a transcript of this conference call produced for The Motley Fool. While we strive for our Foolish Best, there may be errors, omissions, or inaccuracies in this transcript. As with all our articles, The Motley Fool does not assume any responsibility for your use of this content, and we strongly encourage you to do your own research, including listening to the call yourself and reading the company's SEC filings. Please see our Terms and Conditions for additional details, including our Obligatory Capitalized Disclaimers of Liability. The Motley Fool recommends Easterly Government Properties. The Motley Fool has a disclosure policy. Easterly (DEA) Q2 2026 Earnings Call Transcript was originally published by The Motley Fool

In early August 2026, Easterly Government Properties, Inc. reported second-quarter 2026 results showing higher revenue of US$92.42 million but lower net income of US$3.05 million compared with the prior year, while also affirming a quarterly dividend of US$0.45 per share. Despite the year-over-year drop in earnings per share, the company raised its full-year 2026 diluted net income per share guidance to a range of US$0.23 to US$0.29, signaling management’s confidence in its earnings trajectory. Next, we’ll examine how Easterly Government Properties’ raised full-year earnings guidance shapes its investment narrative in light of mixed quarterly results. Uncover the next big thing with 20 elite penny stocks that balance risk and reward. To own Easterly Government Properties, you need to believe in the appeal of a REIT whose tenants are primarily U.S. government agencies, providing a relatively visible rent stream but not necessarily fast growth. The latest quarter reinforced that trade-off: revenue continued to edge higher while net income and margins remained under pressure, and the full-year net income guidance band was reset lower yet nudged up at the midpoint to US$0.23 to US$0.29. That tweak, together with the reaffirmed US$0.45 quarterly dividend and new US$200 million term loan, suggests the near-term story still hinges on income stability and balance sheet management rather than rapid earnings expansion. The mixed results do not radically change the core catalysts or risks, but they do keep profitability, interest coverage and the rich earnings multiple firmly in focus. However, one key risk around earnings coverage of that dividend is worth watching closely. Easterly Government Properties' shares have been on the rise but are still potentially undervalued by 48%. Find out what it's worth. Two fair value views from the Simply Wall St Community span roughly US$24.64 to US$47.56, underlining how far apart individual expectations can sit. Set against the recent earnings reset and pressure on profit margins, this spread gives you a wider context for thinking about how sentiment might shift if earnings or interest costs move in either direction. Explore 2 other fair value estimates on Easterly Government Properties - why the stock might be worth just $24.64! Don't just follow the ticker - dig into the data and build a conviction that's truly your own. A great starting point for your Easterly Government Properties research is our analysis highlighting 2 key rewards and 3 important warning signs that could impact your investment decision. Our free Easterly Government Properties research report provides a comprehensive fundamental analysis summarized in a single visual - the Snowflake - making it easy to evaluate Easterly Government Properties' overall financial health at a glance. The market won't wait. These fast-moving stocks are hot now. Grab the list before they run: Capitalize on the AI infrastructure supercycle with our selection of the 56 best 'picks and shovels' of the AI gold rush converting record-breaking demand into massive cash flow. Invest in the nuclear renaissance through our list of 89 elite nuclear energy infrastructure plays powering the global AI revolution. The future of work is here. Discover the 36 top robotics and automation stocks leading the charge in AI-driven automation and industrial transformation. This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned. Companies discussed in this article include DEA. Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email [email protected]

Our analysts just identified a stock with the potential to be the next Nvidia. Tell us how you invest and we'll show you why it's our #1 pick. Tap here. Delivered 5.4% year-over-year core FFO growth, exceeding the long-term target of 2% to 3% through disciplined capital allocation and portfolio quality improvements. Maintained high portfolio stability with 98% occupancy and a 9.2-year weighted average lease term, driven by the mission-critical nature of secure, purpose-built government facilities. Attributed revenue growth of 10% to recent acquisitions, development completions, lease renewals, and the commencement of TI and BAC income. Emphasized the 'stickiness' of the portfolio, citing assets like the U.S. District Courthouse in Charleston as integral to both federal operations and local community infrastructure. Successfully executed a new $200 million 5-year term loan at 130 basis points over SOFR, reflecting lender confidence in government-backed cash flows. Progressed toward a target of 30% portfolio concentration in state, local, or government-adjacent assets to capture 2% to 3% annual rent escalators. Raised full-year core FFO guidance to a range of $3.07 to $3.13, assuming $50 million to $100 million in development investment and $50 million in acquisitions. Identified a $1.5 billion acquisition and development pipeline, with management expecting to begin meaningful conversion as share prices approach an inflection point for accretive funding. Targeting an additional investment-grade rating in 2027 to enhance access to attractively priced debt capital and support long-term pipeline funding. Anticipates natural deleveraging through upcoming development deliveries and lump-sum reimbursements, moving toward medium-term leverage objectives. Planning for the 2027-2029 lease expiration cycle by structuring renewals to maximize favorability in public markets and debt refinancing scenarios. Acknowledged the FAA's scheduled lease expiration in October; management advised against modeling additional revenue yet, despite potential for a move-out delay. Reported higher maintenance CapEx in Q2 due to seasonal external projects like roofing and HVAC, though full-year expectations remain at $1.50 to $2.00 per square foot. Highlighted the mezzanine financing program as a strategic bridge, targeting $30 million to $50 million in participation with trusted developers for future portfolio additions. Confirmed a disciplined approach to the $1.5 billion pipeline, passing on a deal that only offered 60 to 75 basis points above the cost of capital. One stock. Nvidia-level potential. 30M+ investors trust Moby to find it first. Get the pick. Tap here. Management stated that a stock price range of $24.50 to $25.50 allows for solid growth, while levels above $28 could trigger material acquisition volume exceeding historical norms. The company is focusing on 'veins of advantage' in development, specifically courthouses and Florida law enforcement facilities where they have specialized execution expertise. The primary goal is to refinance the $127.5 million mortgage through an investment-grade unsecured debt issuance. Management noted they have ample capacity on their revolving credit facility to bridge the maturity if the long-term debt market is not optimal at that time. Easterly is cultivating programmatic relationships with sovereign wealth funds and other partners to provide an alternative cost of capital if equity markets are unfavorable. Management emphasized that their status as a 'partner of choice' for the U.S. government makes them an attractive partner for global investors seeking AA+ rent streams. Procurements for 2027 expirations are already underway, with management expecting mid-to-high teens net effective rent growth. Management noted that 2030 will be a particularly strong year for the portfolio due to having less than 1% of leases expiring.

Interested in Easterly Government Properties, Inc.? Here are five stocks we like better. Second-quarter performance improved: Revenue rose 10% year over year to $92.4 million, while Core FFO per share increased 5.4% to $0.78. Occupancy was 98%, with a 9.2-year weighted average lease term. 2026 outlook was raised: Easterly increased its full-year Core FFO guidance to $3.07–$3.13 per share and secured a new $200 million unsecured term loan, improving liquidity and supporting deleveraging. External growth prospects are improving: Management cited a $1.5 billion acquisition and development pipeline and said stronger share valuation could make acquisitions more accretive, while joint ventures and mezzanine financing offer additional funding options. Easterly Government Properties (NYSE:DEA) reported higher second-quarter revenue and per-share earnings, raised its full-year Core FFO guidance and said it is nearing a point where improving equity-market valuation could support more accretive external growth. President and CEO Darrell Crate said Core FFO per share rose 5.4% from a year earlier, exceeding the company’s stated long-term growth target of 2% to 3%. He attributed the performance to steady earnings growth, capital allocation and efforts to improve portfolio quality. → Lost in Space: Why Aerospace Valuations Are Plummeting Right Now Crate emphasized that the company’s portfolio differs from traditional office real estate because it is centered on mission-specific facilities leased to federal agencies, state and municipal tenants, and defense-related companies. He said many properties provide secure, purpose-built environments that are difficult to replicate and are integral to tenant operations. Total revenue increased 10% year over year to $92.4 million from $84.2 million, according to Allison, who said the gain reflected acquisitions and development completed over the past year, lease renewals, and tenant-improvement and building-specific allowance income. → MarketBeat Week in Review – 07/27- 07/31 EBITDA increased about 8% to $58.4 million, compared with $54.3 million in the prior-year quarter. Net income was $0.07 per fully diluted share. Both FFO per share and Core FFO per share were $0.78, up from $0.74 a year earlier. Occupancy was 98% at quarter-end. Weighted average lease term was 9.2 years. Cash available for distribution was approximately $25.8 million. Net debt to annualized quarterly EBITDA was 7.3 times, down from the first quarter. Allison said the company’s three active development projects continued to advance: an FDLE laboratory in Fort Myers, Florida; a U.S. courthouse in Flagstaff, Arizona; and a U.S. courthouse in Medford, Oregon. The Fort Myers project, which broke ground in August 2025, remains on track for delivery later in 2026. → GE HealthCare Stock Climbs on Vital Diagnostics Demand During the quarter, Easterly closed a new $200 million unsecured term loan with a five-year maturity, a $50 million accordion feature and an initial spread of 130 basis points over SOFR. The company used the proceeds to repay borrowings on its revolving credit facility, increasing available liquidity for future investments. Allison said the financing was priced more favorably than the company had expected for a comparable long-term capital solution. She also said development-project reimbursements and future revenue from delivered projects are expected to support deleveraging. The company raised its full-year 2026 Core FFO per-share guidance range to $3.07 to $3.13, an increase of $0.01 at the midpoint from the prior $3.09 to $3.10 midpoint range. At the midpoint, guidance assumes $50 million to $100 million of gross development-related investment and $50 million of wholly owned acquisitions during the year. Management said it continues to pursue an additional investment-grade credit rating in 2027. In discussing the planned refinancing of the $127.5 million Loma Linda mortgage, which matures next summer and carries a 3.6% rate, Allison said an investment-grade unsecured issuance would be the company’s preferred option. She added that Easterly has enough revolver capacity to temporarily carry the debt while pursuing a long-term solution. Crate said Easterly maintains a $1.5 billion acquisition and development pipeline that has been cultivated over several years. He said the company is beginning to see opportunities to fund external growth on an accretive basis as its share price improves. In response to analyst questions, Crate said the company could find “nice transactions” if its stock trades in the $24.50 to $25.50 range, while a share price of $26 to $27 could support a couple hundred million dollars of growth. At higher valuation levels, he said the company could potentially pursue acquisition volume materially above its historical activity. The pipeline has remained relatively stable, though management said approximately $100 million to $200 million of opportunities may rotate in and out during a quarter. Crate said the company passed on one potential acquisition because it was not a must-have asset and offered an estimated 60 to 75 basis points above its cost of capital. Management said it is pursuing both General Services Administration-leased properties and assets in state, local and government-adjacent categories. Crate said the company would ideally add assets in an approximately even mix between GSA and alternative categories, with the latter offering 2% to 3% annual escalators that could improve same-store growth. Easterly also continues to evaluate mezzanine financing opportunities, with management maintaining a target program size of $30 million to $50 million. The company said it has received substantial interest but intends to lend only alongside trusted developers and on assets it would want to own in its portfolio over time. Management said it is actively working through lease procurements for expirations extending through much of 2027 and does not expect results outside its current assumptions. Those assumptions include mid- to high-teens net effective rent growth and average tenant-improvement and building-specific allowance spending of about $35 per square foot. The company said an FAA tenant expected to move out in October will remain through at least the end of its lease term because its notice provisions have expired. Allison said management is hopeful the tenant may remain longer but advised analysts not to include additional revenue in estimates at this point. Crate said dispositions could be evaluated on a case-by-case basis, including for properties that are geographically isolated from the company’s other assets, but he does not anticipate significant portfolio turnover as a means of raising capital for growth. The company is also maintaining and expanding relationships with joint-venture partners. Crate said Easterly has worked with a sovereign wealth fund and other potential partners, and that joint ventures could provide an additional avenue for funding growth if equity-market conditions are less favorable. Easterly Government Properties, Inc is a real estate investment trust that specializes in the acquisition, development and management of commercial properties leased to U.S. government agencies. Structured as a triple-net lease REIT, the company focuses on single-tenant assets with long-term, credit-backed leases that transfer most property-level responsibilities—including taxes, insurance and maintenance—to its government tenants. The firm’s portfolio encompasses a variety of facility types, including office buildings, training centers, laboratories and mission-critical installations used by federal agencies. This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to [email protected]. The article "Easterly Government Properties Q2 Earnings Call Highlights" was originally published by MarketBeat. View MarketBeat's top stocks for August 2026.

WASHINGTON, August 03, 2026--(BUSINESS WIRE)--Easterly Government Properties, Inc. (NYSE: DEA) (the "Company" or "Easterly"), a fully integrated real estate investment trust ("REIT") focused primarily on the acquisition, development and management of Class A commercial properties leased to the U.S. Government and its adjacent partners, today announced its results of operations for the quarter ended June 30, 2026. Highlights for the Quarter Ended June 30, 2026: Net income of $3.2 million, or $0.07 per share on a fully diluted basis Core FFO of $37.4 million, or $0.78 per share on a fully diluted basis Closed a new five-year $200.0 million senior unsecured term loan facility maturing in June 2031, which includes an accordion feature providing the Company with additional capacity, subject to the satisfaction of customary terms and conditions, of up to $50.0 million for a total facility size of $250.0 million Issued an aggregate of 796,943 shares of the Company's common stock in settlement of previously entered into forward sales transactions through the Company's $300.0 million ATM Program launched in June 2021 (the "2021 ATM Program"). These shares were then physically settled in the same quarter at a weighted average price per share of $23.86, raising net proceeds to the Company of approximately $18.8 million "Our second quarter demonstrates continued progress on our strategic priorities," said Darrell Crate, President & CEO of Easterly Government Properties. "Strong execution across the business, including in the capital markets, coupled with the durability of our portfolio, provides increased confidence in our earnings outlook and supports our decision to raise 2026 guidance." Financial Results for the Six Months Ended June 30, 2026: Net income of $4.6 million, or $0.10 per share on a fully diluted basis Core FFO of $74.5 million, or $1.55 per share on a fully diluted basis Portfolio Operations As of June 30, 2026, the Company or its joint venture owned 106 operating properties in the United States encompassing approximately 10.7 million leased square feet, including 93 operating properties that were leased primarily to U.S. Government tenant agencies, eight operating properties leased primarily to tenant agencies of a U.S. state or local government and five operating properties that were entirely leased to private tenants. In addition, the Company wholly owned three properties in development that the Company expects will encompass approximately 0.2 million leased square feet upon completion. The Company's operating portfolio was 98% leased. The first project, located in Fort Myers, Florida, is currently under construction and, once complete, a 25-year lease with the Florida Department of Law Enforcement is expected to commence for their beneficial use. The second development project, located in Flagstaff, Arizona, is currently under construction and, once complete, a 20-year lease with the GSA is expected to commence for the beneficial use of the United States Judiciary. The third project, located in Medford, Oregon, is currently under construction and, once complete, a 20-year lease with the GSA is expected to commence for the beneficial use of the United States Judiciary. As of June 30, 2026, the portfolio had a weighted average age of 17.1 years, based upon the date properties were built or renovated-to-suit, and had a weighted average remaining lease term of 9.2 years. Balance Sheet and Capital Markets Activity As of June 30, 2026, the Company had total indebtedness of approximately $1.7 billion comprised of $43.1 million outstanding on its senior unsecured revolving credit facility, $100.0 million outstanding on its 2016 term loan facility, $200.0 million outstanding on its 2018 term loan facility, $200.0 million outstanding on its 2026 term loan facility, $1.0 billion of senior unsecured notes, and $149.3 million of mortgage debt (excluding unamortized premiums and discounts and deferred financing fees). The Company's outstanding debt had a weighted average maturity of 4.0 years and a weighted average interest rate of 4.6%. Further, the Company's Net Debt to total enterprise value was 58.4% and its Adjusted Net Debt to annualized quarterly EBITDA ratio was 7.1x. Dividend On July 29, 2026, the Board of Directors of Easterly approved a cash dividend for the second quarter of 2026 in the amount of $0.45 per common share. The dividend will be payable August 20, 2026 to shareholders of record on August 10, 2026. Subsequent Events On July 14, 2026, we used $6.4 million of available cash to extinguish the mortgage note obligation on USFS II — Albuquerque. On July 28, 2026, we entered into a sixth amendment to our 2018 term loan facility and a second amendment to our 2024 revolving credit facility to remove the credit spread adjustment applicable to SOFR-based borrowings, consistent with our 2016 term loan facility and our 2026 term loan facility. Other than the foregoing, the material terms of our 2018 term loan facility and our 2024 revolving credit facility remain unchanged. Guidance This guidance is forward-looking and reflects management’s view of current and future market conditions. The Company’s actual results may differ materially from this guidance. Outlook for the 12 Months Ending December 31, 2026 The Company is raising its guidance for full-year 2026 Core FFO per share on a fully diluted basis at a range of $3.07 - $3.13. This guidance assumes approximately $50 million of wholly owned acquisitions and $50 - $100 million of gross development-related investment during 2026. Non-GAAP Supplemental Financial Measures This section contains definitions of certain non-GAAP financial measures and other terms that the Company uses in this press release and, where applicable, the reasons why management believes these non-GAAP financial measures provide useful information to investors about the Company’s financial condition and results of operations and the other purposes for which management uses the measures. These measures should not be considered in isolation or as a substitute for measures of performance in accordance with GAAP. A reconciliation of the differences between each non-GAAP financial measure and the comparable GAAP financial measure are included in this press release following the consolidated financial statements. Additional detail can be found in the Company’s most recent annual report on Form 10-K and quarterly report on Form 10-Q, as well as other documents filed with or furnished to the Securities and Exchange Commission from time to time. We present certain financial information and metrics "at Easterly’s Share," which is calculated on an entity-by-entity basis. "At Easterly’s Share" information, which we also refer to as being "at share," "pro rata," or "our share" is not, and is not intended to be, a presentation in accordance with GAAP. Cash Available for Distribution (CAD) is a non-GAAP financial measure that is not intended to represent cash flow for the period and is not indicative of cash flow provided by operating activities as determined under GAAP. CAD is calculated in accordance with the current Nareit definition as FFO minus normalized recurring real estate-related expenditures and other non-cash items, nonrecurring expenditures and the unconsolidated real estate venture’s allocated share of these adjustments. CAD is presented solely as a supplemental disclosure because the Company believes it provides useful information regarding the Company’s ability to fund its dividends. Because all companies do not calculate CAD the same way, the presentation of CAD may not be comparable to similarly titled measures of other companies. Core Funds from Operations (Core FFO) adjusts FFO to present an alternative measure of the Company's operating performance, which, when applicable, excludes items which it believes 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, provision for (recovery of) credit losses, and the unconsolidated real estate venture's allocated share of these adjustments. In future periods, the Company may also exclude other items from Core FFO that it believes may help investors compare its results. The Company believes Core FFO more accurately reflects the ongoing operational and financial performance of the Company's core business. EBITDA is calculated as the sum of net income (loss) before interest expense, taxes, depreciation and amortization, (gain) loss on the sale of operating properties, impairment loss, and the unconsolidated real estate venture’s allocated share of these adjustments. EBITDA is not intended to represent cash flow for the period, is not presented as an alternative to operating income as an indicator of operating performance, should not be considered in isolation or as a substitute for measures of performance prepared in accordance with GAAP, is not indicative of operating income or cash provided by operating activities as determined under GAAP and may be presented on a pro forma basis. EBITDA is presented solely as a supplemental disclosure with respect to liquidity because the Company believes it provides useful information regarding the Company's ability to service or incur debt. Because all companies do not calculate EBITDA the same way, the presentation of EBITDA may not be comparable to similarly titled measures of other companies. Funds From Operations (FFO) is defined, in accordance with the Nareit FFO White Paper - 2018 Restatement, as net income (loss), 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 and 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. FFO includes the Company’s share of FFO generated by unconsolidated affiliates. FFO is a widely recognized measure of REIT performance. Although FFO is a non-GAAP financial measure, the Company believes that information regarding FFO is helpful to shareholders and potential investors. Net Debt and Adjusted Net Debt Net Debt represents the Company's consolidated debt and its share of unconsolidated debt adjusted to exclude its share of unamortized premiums and discounts and deferred financing fees, less its share of cash and cash equivalents and property acquisition closing escrow, net of deposit. By excluding these items, the result provides an estimate of the contractual amount of borrowed capital to be repaid, net of cash available to repay it. The Company believes this calculation constitutes a beneficial supplemental non-GAAP financial disclosure to investors in understanding its financial condition. Adjusted Net Debt is Net Debt reduced by 1) for each project under construction or in design, the lesser of i) outstanding lump-sum reimbursement amounts and ii) the cost to date, 2) 40% times the amount by which the cost to date exceeds total lump-sum reimbursement amounts for each project under construction or in design and 3) outstanding lump-sum reimbursement amounts for projects previously completed. These adjustments are made to 1) remove the estimated portion of each project under construction, in design or previously completed that has been financed with debt which may be repaid with outstanding cost reimbursement payments from the US Government and 2) remove the estimated portion of each project under construction or in design, in excess of total lump-sum reimbursements, that has been financed with debt but has not yet produced earnings. See page 28 of the Company’s Q2 2026 Supplemental Information Package for further information. The Company’s method of calculating Net Debt and Adjusted Net Debt may be different from methods used by other REITs and may be presented on a pro forma basis. Accordingly, the Company's method may not be comparable to such other REITs. Other Definitions Fully diluted basis assumes the exchange of all outstanding common units representing limited partnership interests in the Company’s operating partnership, or common units, the full vesting of all shares of restricted stock, and the exchange of all earned and vested LTIP units in the Company’s operating partnership for shares of common stock on a one-for-one basis, which is not the same as the meaning of "fully diluted" under GAAP. Conference Call Information The Company will host a webcast and conference call at 11:00 am Eastern time on August 3, 2026 to review the second quarter 2026 performance, discuss recent events and conduct a question-and-answer session. A live webcast will be available in the Investor Relations section of the Company’s website. Shortly after the webcast, a replay of the webcast will be available on the Investor Relations section of the Company's website for up to twelve months. Please note that the full text of the press release and supplemental information package are also available through the Company’s website at ir.easterlyreit.com. About Easterly Government Properties, Inc. Easterly Government Properties, Inc. (NYSE: DEA) is based in Washington, D.C., and focuses primarily on the acquisition, development and management of Class A commercial properties that are leased to the U.S. Government. Easterly’s experienced management team brings specialized insight into the strategy and needs of mission-critical U.S. Government agencies for properties leased to such agencies either directly or through the U.S. General Services Administration (GSA). For further information on the company and its properties, please visit www.easterlyreit.com. Forward Looking Statements We make statements in this press release that are considered "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, or the Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act, which are usually identified by the use of words such as "anticipates," "believes," "estimates," "expects," "intends," "may," "plans," "projects," "seeks," "should," "will," and variations of such words or similar expressions and include our guidance with respect to Net income (loss) and Core FFO per share on a fully diluted basis. We intend these forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995 and are including this statement in this press release for purposes of complying with those safe harbor provisions. These forward-looking statements reflect our current views about our plans, intentions, expectations, strategies and prospects, which are based on the information currently available to us and on assumptions we have made. Although we believe that our plans, intentions, expectations, strategies and prospects as reflected in or suggested by those forward-looking statements are reasonable, we can give no assurance that the plans, intentions, expectations or strategies will be attained or achieved. Furthermore, actual results may differ materially from those described in the forward-looking statements and will be affected by a variety of risks and factors that are beyond our control including, without limitation: 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 our joint venture activities; risks associated with actual or threatened terrorist attacks; 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; 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; and other risks and uncertainties detailed in the "Risk Factors" section of our Form 10-K for the year ended December 31, 2025, filed with the Securities and Exchange Commission (SEC) on February 23, 2026, and under the heading "Risk Factors" in our other public filings. In addition, our anticipated qualification as a real estate investment trust involves the application of highly technical and complex provisions of the Internal Revenue Code of 1986, or the Code, and depends on our ability to meet the various requirements imposed by the Code through actual operating results, distribution levels and diversity of stock ownership. We assume no obligation to update publicly any forward looking statements, whether as a result of new information, future events or otherwise. View source version on businesswire.com: https://www.businesswire.com/news/home/20260803354790/en/ Contacts Easterly Government Properties, Inc.Cole BardawillDirector of Investor [email protected]

This article first appeared on GuruFocus. Total Revenue: $92.4 million for Q2 2026, up 10% year-over-year from $84.2 million in Q2 2025. EBITDA: $58.4 million for the quarter, up approximately 8% from $54.3 million in the prior-year quarter. Net Income: $0.07 per share on a fully diluted basis for Q2 2026. FFO per Share: $0.78, up from $0.74 in Q2 2025. Core FFO per Share: $0.78, up from $0.74 in Q2 2025, representing approximately 5% year-over-year growth. Cash Available for Distribution: Approximately $25.8 million for the quarter. Occupancy: 98% portfolio occupancy. Weighted Average Lease Term: 9.2 years. Net Debt to Annualized Quarterly EBITDA: 7.3 times, down from the first quarter. Full-Year Core FFO per Share Guidance: Raised to a range of $3.07 to $3.13, with a midpoint of $3.10. Warning! GuruFocus has detected 10 Warning Signs with DEA. Is DEA fairly valued? Test your thesis with our free DCF calculator. Release Date: August 03, 2026 For the complete transcript of the earnings call, please refer to the full earnings call transcript. Delivered year-over-year core FFO per share growth of 5.4%, exceeding the 2% to 3% long-term target. Portfolio occupancy remained high at 98% with a weighted average lease term of 9.2 years, reflecting strong tenant stickiness. Successfully closed a new $200 million unsecured term loan with a five-year maturity and attractive pricing (130 bps over SOFR), improving liquidity. Raised full-year core FFO per share guidance to $3.07-$3.13, reflecting confidence in continued operational performance. Maintained a robust $1.5 billion acquisition and development pipeline, with improving equity pricing enabling accretive growth opportunities. Progressing towards an additional investment-grade rating, which could lower future borrowing costs and enhance capital access. Challenging interest rate environment persists, driven by geopolitical volatility, impacting cost of capital. Net debt to annualized quarterly EBITDA remains elevated at 7.3 times, though improving. FAA lease expiration in October 2026 remains uncertain, with potential for move-out and revenue loss. Maintenance CapEx was higher in Q2 due to seasonal external projects, though full-year guidance remains unchanged. Acquisition pipeline faces competition and seller expectations, with some deals not meeting return thresholds (e.g., passed on a deal at 60-75 bps above cost of capital). Dependence on equity issuance for growth, which may be limited by stock price volatility. Q: How should we think about the cadence of unlocking acquisition opportunities as the share price improves, and what is the potential scale of growth? A: Darrell Crate (President and CEO) stated that the company is approaching a level where deploying capital at a 100 basis point premium to its cost of capital is achievable. He noted that due to the company's smaller size, even a couple of hundred million dollars in acquisitions would represent material growth. He expects to see solid growth in 2026 and 2027, with the potential for "very material acquisition volume well in excess of anything we've done historically" in 2028-2030. Q: Can you provide an update on the mezzanine financing program and its role in the pipeline? A: Allison Marino (CFO) confirmed the program target remains between $30 million and $50 million. Darrell Crate added that the company has been "flooded with opportunities" but remains disciplined, only providing financing to trusted developers on buildings they want in their portfolio. This serves as a bridge to future acquisitions as the cost of capital improves. Q: How do you think about your cost of equity, and is there a need to raise equity to meet leverage targets? A: Allison Marino (CFO) explained that the company primarily matches equity raises against acquisition capital, citing the Q2 raise that funded a Q1 acquisition at a higher price than underwritten. She noted a natural deleveraging path from development deliveries, meaning no additional equity is required to meet leverage targets, but they will make decisions based on accretion, leverage, and NAV. Q: How do you plan to refinance the $127.5 million mortgage maturing next summer at 3.6%? A: Allison Marino (CFO) stated that obtaining an investment-grade rating and issuing unsecured debt is the primary goal for refinancing. In the interim, the company has ample capacity on its revolver to fund the maturity until a more attractive long-term solution is found. Darrell Crate added that they are planning well ahead for refinancings in 2027-2029 to maintain their growth trajectory. Q: Can you provide an update on the $1.5 billion pipeline and the rationale for passing on opportunities? A: Darrell Crate (CEO) said the pipeline remains stable, with $100 million to $200 million rotating within it quarterly. He mentioned passing on one deal that was 60-75 basis points above their cost of capital, as it wasn't a "must-have" asset. The company is being selective to position itself for strong earnings growth next year. Q: What is the mix of potential opportunities between GSA assets and alternative investments, and how does this impact growth? A: Darrell Crate (CEO) stated the goal is to have 30% of the portfolio in state, local, or government-adjacent assets, as these have 2-3% escalators, adding 60-90 basis points to same-store growth. He emphasized the company's focus on packaging cash flows to achieve the lowest cost of capital and a premium valuation relative to peers. Q: Are you considering dispositions as a funding source for growth? A: Darrell Crate (CEO) indicated that while they evaluate assets on a case-by-case basis, there won't be significant portfolio turnover to raise cash. He highlighted the potential for joint ventures with partners who have a more attractive cost of capital, noting the company's position as the largest landlord to the US government makes it a "partner of choice" for investors seeking AA-plus rent streams. Q: As more deals start to pencil, should we expect more development or acquisition activity? A: Darrell Crate (CEO) explained that the mix isn't clearly discernible, but the company has a definable edge in development, particularly with courthouses and in Florida. On the acquisition side, being a long-term holder gives them an advantage on buildings not suited for institutional flippers, allowing them to secure attractive pricing on high-quality assets. Q: What is the expected timing for the FAA move-out, and should we model for it? A: Allison Marino (CFO) confirmed the tenant will stay through at least the end of the lease term in October, as notice provisions have expired. She noted they are optimistic they may stay longer due to historical delays in their moving process. Darrell Crate advised not to add additional revenue to models at this time, with an update expected on the next call. Q: Are the cap rates for GSA buildings and alternative assets the same, and how should we think about pricing? A: Darrell Crate (CEO) stated it's case-by-case, with some development deals featuring escalators. The 50-50 mix refers to working on acquisition and development opportunities equally, but the actual outcome matters less than the volume. The focus remains on achieving the long-term growth target of 3% through a combination of lease renewals and pipeline execution. Q: Are you in discussions with potential JV partners to fund deals instead of issuing equity? A: Darrell Crate (CEO) confirmed they maintain and are developing relationships with JV partners, including a large sovereign wealth fund. He emphasized these are programmatic relationships rather than one-off deals, citing a previous VA program that placed $600-700 million of assets. This approach, combined with potential investment-grade debt issuance, supports their growth strategy. Q: Can you provide an update on lease expirations and the procurement process for upcoming renewals? A: Allison Marino (CFO) stated they are in the early stages of procurement for expirations through 2027, expecting mid-to-high teens net effective rent growth and about $35 per square foot in TI and B-Stack. Darrell Crate added that the team has brought more organization and discipline to the process, working closely with the government to streamline renewals for mission-critical facilities. For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Management says the portfolio is mission-critical with 97% occupancy and a ~9.4-year weighted average lease term, positioning Easterly to weather market volatility and pursue an investment-grade rating in 2027. Q1 revenue rose 16% to $91.5 million, EBITDA increased about 12%, FFO/share climbed to $0.76 (core FFO $0.77), and management raised full-year guidance to $3.06–$3.12. The company launched a new capital-allocation tool with a $7 million mezzanine loan for a VA clinic expected to yield ~12%, and said it could deploy roughly $30 million into a VA-focused mezzanine pipeline. Interested in Easterly Government Properties, Inc.? Here are five stocks we like better. Easterly Government Properties (NYSE:DEA) used its first-quarter 2026 earnings call to highlight what management described as stable, mission-driven demand for its portfolio and continued efforts to broaden its growth toolkit amid volatile capital markets. President and CEO Darrell Crate said the company continues to operate amid market volatility driven by interest rates, geopolitical uncertainty, and broader capital market disruption, which he argued tends to favor “durable cash flows, strong tenant credit, and disciplined capital allocation.” He emphasized that Easterly’s properties are tied to essential government functions and should not be viewed like traditional office real estate. → Pipelines and Automation: 2 Energy Plays Built for Any Oil Price Crate pointed to specialized buildouts in certain facilities—such as secure classified environments and sensitive law enforcement spaces—saying these assets are difficult to replicate and supported by long-duration leases and strong tenant credit. He also cited the company’s efforts in recent years to “strengthen the company,” including leadership transitions, “resetting the dividend,” and retaining additional capital internally. For the quarter, Crate reported occupancy of 97% and a weighted average lease term of about 9.4 years. He also said the company is encouraged by first-quarter performance and “ability to raise the low-end of guidance,” while keeping priorities centered on capital discipline and operational execution. Crate added that the company expects to work toward an investment-grade rating, stating it looks forward to “working with the credit agencies on achieving an investment grade rating in 2027.” → Homebuilder Earnings: D.R. Horton Sticks Out as Pulte & NVR Sales Tank In prepared remarks, the company reported first-quarter 2026 total revenue of $91.5 million, up from $78.7 million in the first quarter of 2025, a 16% year-over-year increase. Management attributed the growth primarily to acquisitions completed over the last 12 months, contractual rent growth, and lease stability. EBITDA increased to $57.3 million from $51.0 million a year earlier, representing approximately 12% growth, according to the company. On a fully diluted basis, net income per share was $0.03. Funds from operations (FFO) per share increased to $0.76 from $0.71, while core FFO per share increased to $0.77 from $0.73. Cash available for distribution was approximately $32.2 million. → Meta Platforms Earnings Preview: What to Watch in Q1 2026 Report Following the quarter, management raised the low end of full-year guidance by $0.01. The company updated its full-year range to $3.06 to $3.12 from the prior $3.05 to $3.06, citing the successful closing of a mezzanine loan investment during the quarter. A key topic during the call was the company’s first mezzanine loan investment. Management said it provided $7 million of financing for the development of a 120,000-square-foot VA outpatient clinic in Kennewick, Washington. The loan carries an anticipated 12% yield and supports a 20-year firm term lease commitment from the Department of Veterans Affairs, with an expected completion date of October 2028. Management described the mezzanine structure as a way to generate attractive current returns while maintaining future “optionality” to acquire the asset. On the call, the company said it has both a right of first refusal (ROFR) and a right of first offer (ROFO) embedded in the arrangement. Asked whether the transaction was a one-off, Crate said the company could “see ourselves allocating about $30 millions” to a VA-focused mezzanine pipeline over the next four to six years, adding that $30 million could translate into involvement in “three, four” projects. Later, he told analysts the company could deploy that $30 million “over the next 18 months.” Management also reviewed active development projects and reiterated expected delivery timing: Fort Myers, Florida lab project: expected to complete and commence its lease in the fourth quarter of 2026 Flagstaff Courthouse (Arizona): scheduled to deliver in the first quarter of 2027 Medford Courthouse (Oregon): anticipated to complete during the second half of 2027 The company said these deliveries represent “natural de-levering points” as net operating income comes online and as any agreed-upon lump sums are received. Adjusted net debt to annualized quarterly pro forma EBITDA was 7.3x, which management said edged higher during the quarter due primarily to the timing of equity issuance related to the Commonwealth of Virginia acquisition. The company said it elected to defer issuing the majority of that equity amid share price volatility and expects to complete the issuance by year-end. Management reiterated a $1.5 billion acquisition and development pipeline and said it is “beginning to make meaningful progress on potential transactions” that can be executed at a spread to its cost of capital, either independently or through partnerships. At the midpoint of guidance, the company’s assumptions include $50 million to $100 million of gross development-related investment and $50 million in wholly owned acquisitions for the year. In response to questions about acquisition activity and guidance, management said it was being conservative and would look to update acquisition guidance when it is closer to executing deals. Management also discussed underwriting targets, stating it generally targets a spread around 100 basis points to its cost of capital, with a “50-100” basis-point range referenced on the call, while noting the mezzanine investment represented a much larger spread due to its anticipated yield. Executives also described the mix of the broader pipeline, saying it is “roughly thirds”: about one-third federal, one-third state and local, and one-third government-adjacent. On occupancy and leasing, Crate said the company believes some current vacancy represents space it expected to be vacant at acquisition or during underwriting. He pointed to an FDA lab in Atlanta with “tens of thousands of square feet” not leased and said the team is pursuing additional leasing more aggressively, though he cautioned government leasing processes can take “six to nine-month kinds of things.” Looking toward credit strategy, Crate described leverage and scale as key considerations in the company’s pursuit of an investment-grade rating, adding that Easterly is committed to “behaving like an investment grade company” and that “2027 is hopefully our year.” Easterly Government Properties, Inc is a real estate investment trust that specializes in the acquisition, development and management of commercial properties leased to U.S. government agencies. Structured as a triple-net lease REIT, the company focuses on single-tenant assets with long-term, credit-backed leases that transfer most property-level responsibilities—including taxes, insurance and maintenance—to its government tenants. The firm’s portfolio encompasses a variety of facility types, including office buildings, training centers, laboratories and mission-critical installations used by federal agencies. The article "Easterly Government Properties Q1 Earnings Call Highlights" was originally published by MarketBeat.