Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Jun. 30, 2017 | Aug. 01, 2017 | |
Document And Entity Information [Abstract] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Jun. 30, 2017 | |
Document Fiscal Year Focus | 2,017 | |
Document Fiscal Period Focus | Q2 | |
Trading Symbol | dea | |
Entity Registrant Name | Easterly Government Properties, Inc. | |
Entity Central Index Key | 1,622,194 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 38,928,796 |
Consolidated Balance Sheets (Un
Consolidated Balance Sheets (Unaudited) - USD ($) $ in Thousands | Jun. 30, 2017 | Dec. 31, 2016 |
Assets | ||
Real estate properties, net | $ 1,117,039 | $ 901,066 |
Cash and cash equivalents | 6,105 | 4,845 |
Restricted cash | 3,559 | 1,646 |
Deposits on acquisitions | 1,000 | 1,750 |
Rents receivable | 8,284 | 8,544 |
Accounts receivable | 6,746 | 5,823 |
Deferred financing, net | 1,437 | 2,787 |
Intangible assets, net | 127,127 | 113,795 |
Interest rate swaps | 3,199 | 3,785 |
Prepaid expenses and other assets | 3,120 | 1,422 |
Total assets | 1,277,616 | 1,045,463 |
Liabilities | ||
Revolving credit facility | 68,000 | 212,167 |
Term loan facility, net | 99,132 | |
Notes payable, net | 173,646 | |
Mortgage notes payable, net | 204,782 | 80,806 |
Intangible liabilities, net | 38,175 | 41,840 |
Accounts payable and accrued liabilities | 14,473 | 13,784 |
Total liabilities | 598,208 | 348,597 |
Commitments and contingencies (Note 10) | ||
Equity | ||
Common stock, par value $0.01, 200,000,000 shares authorized, 38,305,101 and 36,874,810 shares issued and outstanding at June 30, 2017 and December 31, 2016, respectively | 383 | 369 |
Additional paid-in capital | 619,668 | 596,971 |
Retained earnings | 3,632 | 1,721 |
Cumulative dividends | (61,226) | (42,794) |
Accumulated other comprehensive income | 2,661 | 3,038 |
Total stockholders' equity | 565,118 | 559,305 |
Non-controlling interest in Operating Partnership | 114,290 | 137,561 |
Total equity | 679,408 | 696,866 |
Total liabilities and equity | $ 1,277,616 | $ 1,045,463 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) (Unaudited) - $ / shares | Jun. 30, 2017 | Dec. 31, 2016 |
Statement Of Financial Position [Abstract] | ||
Common Stock, par value | $ 0.01 | $ 0.01 |
Common Stock, shares authorized | 200,000,000 | 200,000,000 |
Common Stock, shares issued | 38,305,101 | 36,874,810 |
Common Stock, shares outstanding | 38,305,101 | 36,874,810 |
Consolidated Statements of Oper
Consolidated Statements of Operations (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | |
Revenues | ||||
Rental income | $ 27,501 | $ 22,291 | $ 53,521 | $ 44,027 |
Tenant reimbursements | 2,974 | 2,476 | 6,602 | 4,631 |
Other income | 128 | 154 | 367 | 234 |
Total revenues | 30,603 | 24,921 | 60,490 | 48,892 |
Operating expenses | ||||
Property operating | 5,837 | 5,085 | 12,186 | 9,418 |
Real estate taxes | 2,979 | 2,332 | 5,714 | 4,700 |
Depreciation and amortization | 13,462 | 11,074 | 26,522 | 21,937 |
Acquisition costs | 456 | 346 | 988 | 679 |
Corporate general and administrative | 3,142 | 3,052 | 6,586 | 6,088 |
Total expenses | 25,876 | 21,889 | 51,996 | 42,822 |
Operating income | 4,727 | 3,032 | 8,494 | 6,070 |
Other expenses | ||||
Interest expense, net | (3,714) | (1,995) | (6,131) | (3,924) |
Net income | 1,013 | 1,037 | 2,363 | 2,146 |
Non-controlling interest in Operating Partnership | (186) | (338) | (452) | (772) |
Net income available to Easterly Government Properties, Inc. | $ 827 | $ 699 | $ 1,911 | $ 1,374 |
Net income available to Easterly Government Properties, Inc. per share: | ||||
Basic | $ 0.02 | $ 0.02 | $ 0.05 | $ 0.05 |
Diluted | $ 0.02 | $ 0.02 | $ 0.05 | $ 0.05 |
Weighted-average common shares outstanding | ||||
Basic | 37,408,603 | 27,484,075 | 37,151,527 | 25,812,893 |
Diluted | 39,845,314 | 29,267,258 | 39,534,993 | 27,538,423 |
Dividends declared per common share | $ 0.25 | $ 0.23 | $ 0.49 | $ 0.45 |
Consolidated Statements of Comp
Consolidated Statements of Comprehensive Income (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | |
Statement Of Income And Comprehensive Income [Abstract] | ||||
Net income | $ 1,013 | $ 1,037 | $ 2,363 | $ 2,146 |
Other comprehensive loss: | ||||
Unrealized loss on interest rate swaps | (694) | (586) | ||
Other comprehensive loss: | (694) | (586) | ||
Comprehensive income | 319 | 1,037 | 1,777 | 2,146 |
Non-controlling interest in Operating Partnership | (186) | (338) | (452) | (772) |
Other comprehensive loss attributable to non-controlling interest | 221 | 209 | ||
Comprehensive income attributable to Easterly Government Properties, Inc. | $ 354 | $ 699 | $ 1,534 | $ 1,374 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows (unaudited) - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2017 | Jun. 30, 2016 | |
Cash flows from operating activities | ||
Net income | $ 2,363 | $ 2,146 |
Adjustments to reconcile net income to net cash provided by operating activities | ||
Depreciation and amortization | 26,522 | 21,937 |
Straight line rent | (493) | 33 |
Amortization of above- / below-market leases | (4,218) | (3,409) |
Amortization of unearned revenue | (55) | (50) |
Amortization of loan premium / discount | (42) | (43) |
Amortization of deferred financing costs | 516 | 432 |
Non-cash compensation | 1,467 | 1,422 |
Net change in: | ||
Rents receivable | 787 | (517) |
Accounts receivable | (923) | (789) |
Prepaid expenses and other assets | (1,698) | (449) |
Accounts payable and accrued liabilities | 318 | 329 |
Net cash provided by operating activities | 24,544 | 21,042 |
Cash flows from investing activities | ||
Real estate acquisitions and deposits | (249,492) | (129,796) |
Additions to operating properties | (901) | (266) |
Additions to development properties | (3,911) | |
Restricted cash | (1,913) | 179 |
Net cash (used in) investing activities | (256,217) | (129,883) |
Cash flows from financing activities | ||
Payment of deferred financing costs | (3,225) | |
Issuance of common shares | 1,886 | 84,943 |
Credit facility draws | 108,000 | 53,750 |
Credit facility repayments | (252,167) | (10,000) |
Term loan draws | 100,000 | |
Issuance of notes payable | 175,000 | |
Issuance of mortgage notes payable | 127,500 | |
Repayments of mortgage notes payable | (1,473) | (1,414) |
Dividends and distributions paid | (22,564) | (19,001) |
Payment of offering costs | (24) | (3,909) |
Net cash provided by financing activities | 232,933 | 104,369 |
Net increase (decrease) in cash and cash equivalents | 1,260 | (4,472) |
Cash and cash equivalents, beginning of period | 4,845 | 8,176 |
Cash and cash equivalents, end of period | 6,105 | 3,704 |
Supplemental disclosure of cash flow information is as follows (amounts in thousands): | ||
Cash paid for interest | 5,271 | 3,615 |
Financing costs accrued, not paid | 173 | |
Offering costs accrued, not paid | 174 | |
Unrealized loss on interest rate swaps | (586) | |
Exchange of Common Units for Shares of Common Stock | ||
Non-controlling interest in Operating Partnership | (19,866) | (88,674) |
Common stock | 13 | 58 |
Additional paid-in capital | 19,853 | 88,616 |
Operating Properties [Member] | ||
Supplemental disclosure of cash flow information is as follows (amounts in thousands): | ||
Additions to properties accrued, not paid | 229 | $ 87 |
Development Properties [Member] | ||
Supplemental disclosure of cash flow information is as follows (amounts in thousands): | ||
Additions to properties accrued, not paid | $ 11 |
Organization and Basis of Prese
Organization and Basis of Presentation | 6 Months Ended |
Jun. 30, 2017 | |
Accounting Policies [Abstract] | |
Organization and Basis of Presentation | 1. Organization and Basis of Presentation The information contained in the following notes to the consolidated financial statements is condensed from that which would appear in the annual consolidated financial statements; accordingly, the consolidated financial statements included herein should be reviewed in conjunction with the consolidated financial statements for the fiscal year ended December 31, 2016, and related notes thereto, included in the Annual Report on Form 10-K of Easterly Government Properties, Inc. (which may be referred to in these financial statements as the “Company,” “we,” “us,” or “our”) for the year ended December 31, 2016 filed with the U.S. Securities and Exchange Commission (the “SEC”) on March 2, 2017. The Company is a Maryland corporation that has elected to be taxed as a real estate investment trust (“REIT”) under the Internal Revenue Code, as amended (the “Code”) commencing with its taxable year ended December 31, 2015. The operations of the Company are carried on primarily through Easterly Government Properties LP (the “Operating Partnership”) and the wholly owned subsidiaries of the Operating Partnership. We are an internally managed 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 substantially all 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. As of June 30, 2017, we wholly owned 45 operating properties in the United States, including 42 operating properties that were leased primarily to U.S. Government tenant agencies and three operating properties that were entirely leased to private tenants, encompassing approximately 3.5 million square feet in the aggregate. In addition, we wholly owned two properties under development encompassing approximately 0.1 million square feet. We focus 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 with the tenant agency to meet its needs and objectives. The Operating Partnership holds substantially all of our assets and conducts substantially all our business. The Company is the sole general partner of the Operating Partnership. The Company owned approximately 83.2% of the aggregate limited partnership interests in the Operating Partnership (“common units”) at June 30, 2017. We 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. Principle of Consolidation The accompanying consolidated financial statements are presented on the accrual basis of accounting in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and include the accounts of the Company, including Easterly Government Properties TRS, LLC, Easterly Government Services, LLC and the Operating Partnership. All significant intercompany balances and transactions have been eliminated in consolidation. Basis of Presentation The condensed consolidated financial statements included herein are unaudited; however, they include all adjustments (consisting only of normal recurring adjustments) which, in the opinion of management, are necessary to state fairly the consolidated financial position of the Company at June 30, 2017, and the consolidated results of operations and the consolidated cash flows for the three and six months ended June 30, 2017 and 2016. The year-end condensed consolidated balance sheet data was derived from audited financial statements, but does not include all disclosures required by GAAP. The results of operations for the interim periods presented are not necessarily indicative of the results to be expected for the full year. The preparation of the consolidated financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the balance sheet and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 6 Months Ended |
Jun. 30, 2017 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | 2. Summary of Significant Accounting Policies The significant accounting policies used in the preparation of the Company’s condensed consolidated financial statements are disclosed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2016. Recently Adopted Accounting Pronouncements On January 1, 2017, the Company adopted ASU 2017-01, Business Combinations (Topic 805), which clarifies the framework for determining whether an integrated set of assets and activities meets the definition of a business. The revised framework establishes a screen for determining whether an integrated set of assets and activities is a business and narrows the definition of a business, which is expected to result in fewer transactions being accounted for as business combinations. Acquisitions of integrated sets of assets and activities that do not meet the definition of a business are accounted for as asset acquisitions. As a result the Company believes most of our future acquisitions of operating properties will qualify as asset acquisitions and third-party transaction costs associated with these acquisitions will be capitalized while internal acquisition costs will continue to be expensed. On January 1, 2017, the Company adopted ASU No. 2016-09, Compensation – Stock Compensation, which identifies areas for simplification involving several aspects of accounting for share-based payment transactions. The new guidance allows for entities to make an entity-wide accounting policy election to either estimate the number of awards that are expected to vest or account for forfeitures when they occur. In addition, the guidance allows employers to withhold shares to satisfy minimum statutory tax withholding requirements up to the employees’ maximum individual tax rate without causing the award to be classified as a liability. The guidance also stipulates that cash paid by an employer to a taxing authority when directly withholding shares for tax-withholding purposes should be classified as a financing activity on the statement of cash flows. The implementation of this update did not have a material impact in our consolidated financial statements. Recent Accounting Pronouncements Not Yet Adopted In May 2014, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2014-09, Revenue from Contracts with Customers, which requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers and will replace most existing revenue recognition guidance when it becomes effective. This amendment applies to all contracts with customers except those that are within the scope of other topics in the FASB ASC (“Accounting Standards Codification”). In July 2015, the FASB issued ASU 2015-14 which deferred the effective date of ASU 2014-09 by one year to annual reporting periods beginning after December 15, 2017, including interim periods within that reporting period. The Company will adopt ASU 2014-09 and the related updates subsequently issued by the FASB in January 2018 using one of two methods: retrospective restatement for each reporting period presented at the time of adoption, or retrospectively with the cumulative effect of initially applying this guidance recognized at the date of initial application. The Company has not decided which method of adoption we will use. The Company is continuing to evaluate ASU No. 2014-09, additional information about the Company’s revenue streams and other considerations are summarized below. Rental income from real property is derived from rental agreements, whereby 42 of the Company’s operating properties are leased primarily to the U.S. Government and three of the Company’s operating properties are entirely leased to private tenants. Rental income from real property is specifically excluded from ASU 2014-09. Tenant reimbursements – is comprised of tenant reimbursements from real estate taxes, and certain other expenses, as well as tenant project reimbursements that consist primarily of subcontracted costs that are reimbursed to us by the tenant. Other income – is comprised primarily of the management fee income associated with tenant project reimbursements. In February 2016, the FASB issued ASU No. 2016-02, Leases, which sets out the principles for the recognition, measurement, presentation and disclosure of leases for both parties to a contract (i.e., lessees and lessors). The new standard requires lessees to apply a dual approach, classifying leases as either finance or operating leases based on the principle of whether or not the lease is effectively a financed purchase of the leased asset by the lessee. This classification will determine whether the lease expense is recognized based on an effective interest method or on a straight-line basis over the term of the lease. A lessee is also required to record a right-of-use asset and a lease liability for all leases with a term of greater than 12 months regardless of their classification. Leases with a term of 12 months or less will be accounted for in the same manner as operating leases today. As of June 30, 2017, the Company had a sublease for office space in Washington D.C. expiring in June 2021 and a lease for office space in San Diego, CA expiring in April 2022. The remaining contractual payments under the Company’s lease and sublease for office space aggregate $2.1 million. Additionally, ASU 2016-02 will require that lessees and lessors capitalize, as initial direct costs, only those costs that are incurred due to the execution of a lease. Under ASU 2016-02, allocated payroll costs and other costs that are incurred regardless of whether the lease is obtained will no longer be capitalized as initial direct costs and instead will be expensed as incurred. The new standard requires lessors to account for leases using an approach that is substantially equivalent to existing guidance for sales-type leases, direct financing leases and operating leases. ASU No. 2016-02 is effective for reporting periods beginning after December 15, 2018, with early adoption permitted. The standard permits the use of either the retrospective or modified retrospective transition method. The Company is in the process of evaluating the impact of this new guidance. In August 2016, the FASB issued ASU No. 2016-15, Statement of Cash Flows (Topic 230), which provides classification guidance for certain cash receipts and cash payments including payment of debt extinguishment costs, settlement of zero-coupon debt instruments, insurance claim payments and distributions from equity method investees. The standard is effective on January 1, 2018, with early adoption permitted. The Company is in the process of evaluating the impact of this new guidance. In November 2016, the FASB issued ASU No. 2016-18, Statement of Cash Flows (Topic 230), which requires that the statement of cash flows explain the change during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. Therefore, amounts generally described as restricted cash and restricted cash equivalents should be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows. The standard is effective on January 1, 2018, with early adoption permitted. The Company is in the process of evaluating the impact of this new guidance. In February 2017, the FASB issued ASU No. 2017-05, Other Income-Gains and Losses from the Derecognition of Nonfinancial Assets (Subtopic 610-20): Clarifying the Scope of Asset Derecognition Guidance and Accounting for Partial Sales of Nonfinancial Assets. This ASU clarifies the scope and accounting of a financial asset that meets the definition of an “in-substance nonfinancial asset” and defines the term “in-substance nonfinancial asset.” This ASU also adds guidance for partial sales of nonfinancial assets. ASU 2017-05 will be effective at the same time ASU No. 2014-09 |
Real Estate and Intangibles
Real Estate and Intangibles | 6 Months Ended |
Jun. 30, 2017 | |
Real Estate [Abstract] | |
Real Estate and Intangibles | 3. Real Estate and Intangibles During the six months ended June 30, 2017, we acquired two operating properties, OSHA – Sandy and VA – Loma Linda, in asset acquisitions for an aggregate purchase price of $249.6 million, of which VA – Loma Linda comprised $212.6 million. We allocated the purchase price of the acquisition based on the estimated fair values of the acquired assets and assumed liabilities as follows (dollars in thousands): Total Real estate Land $ 14,837 Building 208,004 Acquired tenant improvements 927 Total real estate 223,768 Intangible assets In-place leases 17,676 Acquired leasing commissions 9,402 Total intangible assets 27,078 Intangible liabilities Below-market leases (1,255 ) Total intangible liabilities (1,255 ) Purchase price $ 249,591 We did not assume any debt upon acquisition of these properties. The intangible assets and liabilities of operating properties acquired have a weighted average amortization period of 16.61 years as of June 30, 2017. During the six months ended June 30, 2017, we included $2.6 million of revenues and $1.0 million of net income in our consolidated statement of operations related to operating properties acquired. During the six months ended June 30, 2017, we incurred $1.0 million of acquisition-related expenses including $0.8 million of internal costs associated with property acquisitions. Pro Forma Financial Information We did not have any business combinations during the six months ended June 30, 2017. As such, the unaudited pro forma financial information set forth below presents results for the six months ended June 30, 2016 as if the ICE – Albuquerque and NPS – Omaha acquisitions had occurred on January 1, 2015. The pro forma information is not necessarily indicative of the results that actually would have occurred nor does it intend to indicate future operating results (dollars in thousands): For the six months ended Proforma (unaudited) June 30, 2016 Total rental revenue $ 49,940 Net income (loss) (1) 2,996 (1) The net income for the six months ended June 30, 2016 excludes $0.7 million of property acquisition costs. Consolidated Real Estate and Intangibles Real estate and intangibles consisted of the following as of June 30, 2017 (dollars in thousands): Total Real estate properties, net Land $ 127,660 Building 993,657 Acquired tenant improvements 40,863 Construction in progress 8,498 Accumulated amortization (53,639 ) Total Real estate properties, net $ 1,117,039 Intangible assets, net In-place leases $ 140,338 Acquired leasing commissions 32,586 Above market leases 10,631 Accumulated amortization (56,428 ) Total Intangible assets, net $ 127,127 Intangible liabilities, net Below market leases $ (57,753 ) Accumulated amortization 19,578 Total Intangible liabilities, net $ (38,175 ) |
Debt
Debt | 6 Months Ended |
Jun. 30, 2017 | |
Debt Disclosure [Abstract] | |
Debt | 4. Debt At June 30, 2017, our borrowings consisted of the following (dollars in thousands): Loan Principal Outstanding Interest Rate (1) Maturity Date Revolving credit facility: Senior unsecured revolving credit facility (2) $ 68,000 L + 140bps February 2019 (3) Total revolving credit facility 68,000 Term loan facility: Senior unsecured term loan facility 100,000 3.12% (4) September 2023 Total term loan facility 100,000 Less: Total unamortized deferred financing fees (868 ) Total term loan facility, net 99,132 Notes payable: Senior unsecured notes payable, series A 95,000 4.05% May 2027 Senior unsecured notes payable, series B 50,000 4.15% May 2029 Senior unsecured notes payable, series C 30,000 4.30% May 2032 Total notes payable 175,000 Less: Total unamortized deferred financing fees (1,354 ) Total notes payable, net 173,646 Mortgage notes payable: CBP - Savannah 14,562 3.40% (5) July 2033 ICE - Charleston 20,369 4.21% (5) January 2027 MEPCOM - Jacksonville 11,234 4.41% (5) October 2025 USFS II - Albuquerque 17,044 4.46% (5) July 2026 DEA - Pleasanton 15,700 L + 150bps (5) October 2023 VA - Loma Linda 127,500 3.59% July 2027 Total mortgage notes payable 206,409 Less: Total unamortized deferred financing fees (2,045 ) Less: Total unamortized premium/discount 418 Total mortgage notes payable, net 204,782 Total debt 545,560 (1) At June 30, 2017, the one-month LIBOR (“L”) was 1.23%. 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 the Company's senior unsecured revolving credit facility and senior unsecured term loan facility is based on the Company's consolidated leverage ratio, as defined in the respective loan agreements. (2) Available capacity of $332.0 million at June 30, 2017 with an accordion feature that provides additional capacity of $250.0 million, for a total facility size of not more than $650.0 million. (3) Credit facility has two six-month as-of-right extension options subject to certain conditions and the payment of an extension fee. (4) Entered into two interest rate swaps with an effective date of March 29, 2017 with an aggregate notional value of $100 million to effectively fix the interest rate at 3.12% annually. (5) Effective interest rates are as follows: CBP - Savannah 4.12%, ICE - Charleston 3.93% , MEPCOM - Jacksonville 3.89%, USFS II - Albuquerque 3.92%, DEA - Pleasanton 1.8%. The table below sets forth the costs included in interest expense related to the Company's debt arrangements on the accompanying Consolidated Statement of Operations for the three and six months ended June 30, 2017 and 2016 (dollars in thousands): For the three months ended June 30, For the six months ended June 30, Costs Included in Interest Expense 2017 2016 2017 2016 Amortization of deferred financing fees $ 265 $ 216 $ 516 $ 432 On May 25, 2017, the Operating Partnership issued $175 million of fixed rate, senior unsecured notes (the “Notes) in a private placement pursuant to a purchase agreement among the Operating Partnership, the Company and the purchasers of the Notes (the “Purchase Agreement”). The Notes are unconditionally guaranteed by the Company and various subsidiaries of the Operating Partnership (the “Subsidiary Guarantors”). Subject to the terms of the Purchase Agreement and the Notes, upon certain events of default, including, but not limited to, (i) a default in the payment of any principal, “make-whole” amount or interest under the Notes, and (ii) a default in the payment of certain other indebtedness of the Operating Partnership or of the Company or of the Subsidiary Guarantors, the principal and accrued and unpaid interest and the make-whole amount on the outstanding Notes will become due and payable at the option of the holders. The Purchase Agreement and Notes also contain various covenants (including, among others, financial covenants with respect to debt service coverage, consolidated net worth, fixed charges and consolidated leverage and covenants relating to liens). If the Operating Partnership or the Company breaches any of these covenants, the principal and accrued and unpaid interest and the make-whole amount on the outstanding Notes will become due and payable at the option of the holders. The Operating Partnership may prepay at any time all, or from time to time any part of, the Notes, in the amount not less than 5% of the aggregate principal amount of the Notes then outstanding at (i) 100% of the principal amount so prepaid, together with accrued interest, and (ii) a make-whole amount that is calculated by discounting the value of the remaining scheduled interest payments that would otherwise be payable through the scheduled maturity date of the applicable Notes on the principal amount being prepaid. The Operating Partnership has the right to make tender offers and is required to make other prepayment offers under the terms set forth in the Purchase Agreement. On June 28, 2017, the Company, through a wholly-owned subsidiary of the Operating Partnership, entered into a $127.5 million mortgage loan secured by VA – Loma Linda. Financial Covenant Considerations The Company was in compliance with all financial and other covenants as of June 30, 2017 related to its senior unsecured revolving credit facility, senior unsecured term loan facility, senior unsecured notes payable and secured mortgage notes payable. Fair Value of Debt As of June 30, 2017, the carrying value of our senior unsecured revolving credit facility approximated fair value. In determining the fair value we considered the short term maturity, variable interest rate and credit spreads. We deem the fair value of our senior unsecured revolving credit facility as a Level 3 measurement. As of June 30, 2017, the carrying value of our senior unsecured term loan facility approximated fair value. In determining the fair value we considered the variable interest rate and credit spreads. We deem the fair value of our senior unsecured term loan facility as a Level 3 measurement. At June 30, 2017, the fair value of our notes payable was determined by discounting future contractual principal and interest payments using prevailing market rates. We deem the fair value measurement of our notes payable instruments as a Level 3 measurement. At June 30, 2017, the fair value of our notes payable was $177.9 million. At June 30, 2017, the fair value of our mortgage debt was determined by discounting future contractual principal and interest payments using prevailing market rates. We deem the fair value measurement of our mortgage debt instruments as a Level 3 measurement. At June 30, 2017, the fair value of our mortgage debt was $205.2 million. |
Derivatives and Hedging Activit
Derivatives and Hedging Activities | 6 Months Ended |
Jun. 30, 2017 | |
Derivative Instruments And Hedging Activities Disclosure [Abstract] | |
Derivatives and Hedging Activities | 5. Derivatives and Hedging Activities As of June 30, 2017, the Company had two outstanding forward-starting interest rate swaps with an aggregate notional value of $100.0 million that were designated as cash flow hedges. The forward swaps have an effective date of March 29, 2017 and extend until the maturity of our senior unsecured term loan facility on September 29, 2023. The forward swaps effectively fix the interest rate under our senior unsecured term loan facility at 3.12% annually based on the Company’s current consolidated leverage ratio and a variable interest rate of one-month LIBOR. Cash Flow Hedges of Interest Rate Risk As of June 30, 2017, our forward swaps were classified as an asset on our consolidated balance sheet at $3.2 million. The effective portion of changes in the fair value of derivatives designated and qualified as cash flow hedges is recorded in accumulated other comprehensive income and will be reclassified to interest expense in the period that the hedged forecasted transactions affect earnings on the Company’s variable rate debt. The ineffective portion of the change in fair value of the derivatives is recognized directly in earnings into interest expense. For the six months ended June 30, 2017, the amount of unrealized loss recognized in accumulated other comprehensive income on interest rate swaps was $0.6 million and the amount of loss reclassified from accumulated other comprehensive income into interest expense was $0.1 million. Additionally, during the six months ended June 30, 2017, there was no ineffectiveness. The Company estimates that less than $0.1 million will be reclassified from accumulated other comprehensive income as an increase to interest expense over the next 12 months. Credit-Risk-Related Contingent Features The Company has agreements with each of its derivative counterparties that contain a provision where the Company could be declared in default on its derivative obligations if repayment of the underlying indebtedness is accelerated by the lender due to the Company's default on the indebtedness. As of June 30, 2017, the Company did not have any derivatives in a net liability position. |
Fair Value Measurements
Fair Value Measurements | 6 Months Ended |
Jun. 30, 2017 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements | 6. Fair Value Measurements Accounting standards define fair value as the exit price, or the amount that would be received upon sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The standards also establish a hierarchy for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available. Observable inputs are inputs market participants would use in valuing the asset or liability developed based on market data obtained from sources independent of us. Unobservable inputs are inputs that reflect our assumptions about the factors market participants would use in valuing the asset or liability developed based upon the best information available in the circumstances. The hierarchy of these inputs is broken down into three levels: Level 1, defined as observable inputs such as quoted prices in active markets; Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable; and Level 3, defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions. Categorization within the valuation hierarchy is based upon the lowest level of input that is most significant to the fair value measurement. Recurring fair value measurements The fair values of our interest rate swaps are determined using widely accepted valuation techniques, including discounted cash flow analysis on the expected cash flows of each derivative. This analysis reflects the contractual terms of the derivatives, including the period to maturity, and uses observable market-based inputs, including interest rate curves and implied volatilities in such interest rates. While the Company determined that the majority of the inputs used to value its derivatives fall within Level 2 of the fair value hierarchy, the credit valuation adjustments associated with its derivatives utilize Level 3 inputs, such as estimates of current credit spreads to evaluate the likelihood of default by the Company and its counterparties. The Company has determined that the significance of the impact of the credit valuation adjustments made to its derivative contracts, which determination was based on the fair value of each individual contract, was not significant to the overall valuation. As a result, all of the Company’s derivatives held as of June 30, 2017 were classified as Level 2 of the fair value hierarchy. The carrying values of cash and cash equivalents, restricted cash, accounts receivable, other assets and accounts payable and accrued expenses are reasonable estimates of fair values because of the short maturities of these instruments. For our disclosure of debt fair values in Note 4, we estimated the fair value of our unsecured senior revolving credit facility based on the short term maturity, variable interest rates and credit spreads (categorized within Level 3 of the fair value hierarchy), estimated the fair value of our senior unsecured term loan facility based on the variable interest rate and credit spreads (categorized within Level 3 of the fair value hierarchy) and estimated the fair value of our other debt based on the discounted estimated future cash payments to be made on such debt (categorized within Level 3 of the fair value hierarchy); the discount rates used approximate current market rates for loans, or groups of loans, with similar maturities and credit quality, and the estimated future payments included scheduled principal and interest payments. Fair value estimates are made as of a specific point in time, are subjective in nature and involve uncertainties and matters of significant judgement. Settlement at such fair value amounts may not be possible and may not be prudent management decision. The table below presents the Company’s assets and liabilities measured at fair value on a recurring basis as of June 30, 2017, aggregated by the level in the fair value hierarchy within which those measurements fall. As of June 30, 2017 Balance Sheet Line Item Level 1 Level 2 Level 3 Interest rate swaps - Asset $ — $ 3,199 $ — |
Equity
Equity | 6 Months Ended |
Jun. 30, 2017 | |
Equity [Abstract] | |
Equity | 7. Equity The following table summarizes the changes in our stockholders’ equity for the six months ended June 30, 2017 and 2016 (dollars in thousands): Shares Common Stock Par Value Additional Paid-in Capital Retained Earnings (Deficit) Cumulative Dividends Accumulated Other Comprehensive Income Non- controlling Interest in Operating Partnership Total Equity Six months ended June 30, 2017 Balance at December 31, 2016 36,874,810 $ 369 $ 596,971 $ 1,721 $ (42,794 ) $ 3,038 $ 137,561 $ 696,866 Stock based compensation — 158 — — — 1,309 1,467 Dividends and distributions paid — — — (18,432 ) — (4,132 ) (22,564 ) Grant of unvested restricted stock 17,912 — — — — — — — Redemption of common units for shares of common stock 1,325,331 13 19,853 — — — (19,866 ) — Issuance of common stock 87,048 1 1,861 — — — — 1,862 Unrealized loss on interest rate swaps — — — — (377 ) (209 ) (586 ) Net income — — 1,911 — — 452 2,363 Allocation of non-controlling interest in Operating Partnership — 825 — — — (825 ) — Balance at June 30, 2017 38,305,101 $ 383 $ 619,668 $ 3,632 $ (61,226 ) $ 2,661 $ 114,290 $ 679,408 Six months ended June 30, 2016 Balance at December 31, 2015 24,168,379 $ 241 $ 391,767 $ (1,694 ) $ (13,051 ) $ — $ 242,631 $ 619,894 Stock based compensation — 145 — — — 1,277 1,422 Dividends and distributions paid — — — (12,806 ) — (6,195 ) (19,001 ) Grant of unvested restricted stock 16,128 — — — — — — — Redemption of common units for shares of common stock 5,745,028 58 88,616 — — — (88,674 ) — Public offering 4,719,045 47 80,813 — — — — 80,860 Net income — — 1,374 — — 772 2,146 Allocation of non-controlling interest in Operating Partnership — (1,269 ) — — — 1,269 — Balance at June 30, 2016 34,648,580 $ 346 $ 560,072 $ (320 ) $ (25,857 ) $ — $ 151,080 $ 685,321 On March 8, 2017, the Company issued an aggregate of 2,692 shares of restricted common stock to certain employees pursuant to our 2015 Equity Incentive Plan. The restricted common stock grants will vest upon the second anniversary of the grant date so long as the grantee remains an employee of the Company on such date. In connection with our 2017 annual meeting of stockholders, we issued an aggregate of 15,220 shares of restricted common stock to our non-employee directors pursuant to our 2015 Equity Incentive Plan. The restricted common stock grants will vest upon the earlier of the anniversary of the date of grant or the next annual stockholder meeting. A summary of our shares of restricted common stock and long-term incentive plan units in the Operating Partnership (“LTIP units”) awards at June 30, 2017 is as follows: Restricted Shares Restricted Shares Weighted Average Grant Date Fair Value Per Share LTIP Units LTIP Units Weighted Average Grant Date Fair Value Per Share Outstanding, December 31, 2016 16,128 $ 18.60 926,000 $ 8.91 Vested (16,128 ) 18.60 — — Granted 17,912 19.72 — — Forfeited — — — — Outstanding, June 30, 2017 17,912 $ 19.72 926,000 $ 8.91 We recognized $1.5 million in compensation expense related to the restricted common stock and the LTIP unit awards for the six months ended June 30, 2017. As of June 30, 2017, unrecognized compensation expense for both awards was $3.1 million, which will be amortized over the vesting period. We valued our non-vested restricted share award issued in 2017 at the grant date fair value, which was the market price of our shares of common stock. On March 27, 2017, we completed an underwritten public offering of an aggregate of 4,945,000 shares of common stock, including 645,000 shares sold pursuant the underwriters exercise in full of their option to purchase additional shares. The shares were offered on a forward basis in connection with certain forward sales agreements entered into with certain financial institutions, acting as forward purchasers. Pursuant to the forward sales agreements, the forward purchasers borrowed and the forward sellers, acting as agents for the forward purchasers, sold an aggregate of 4,945,000 shares in the public offering. We did not initially receive any proceeds from the sale of shares of our common stock by the forward sellers in the public offering, but expect to receive gross proceeds of approximately $94.0 million upon full physical settlement of the forward sales agreements, which we expect will occur no later than September 27, 2017. The Company will account for the forward share agreements as equity. In connection with the liquidation of certain private investment funds that contributed assets in our initial public offering, we issued 1,325,331 shares of our common stock between January 1, 2017 and June 30, 2017 upon the redemption of 1,325,331 common units in accordance with the terms of the partnership agreement of the Operating Partnership. On May 3, 2017, our board of directors declared a dividend for the first quarter of 2017 in the amount of $0.25 per share of common stock and per common unit outstanding to stockholders and common unit holders of record as of the close of business on June 14, 2017. Our board of directors also declared a dividend for the first quarter of 2017 for each LTIP unit in an amount equal to 10% of the dividend paid per common unit. Such dividends were paid on June 29, 2017. On August 2, 2017, our board of directors declared a dividend for the second quarter of 2017 in the amount of $0.25 per share of common stock and per common unit outstanding to stockholders and common unit holders of record as of the close of business on September 13, 2017. Our board of directors also declared a dividend for the second quarter of 2017 for each LTIP unit in an amount equal to 10% of the dividend paid per common unit. Such dividends are to be paid on September 28, 2017. On March 3, 2017, we entered into separate equity distribution agreements with each of Citigroup Global Markets Inc., BTIG, LLC, Jefferies LLC, Raymond James & Associates, Inc., RBC Capital Markets, LLC and SunTrust Robinson Humphrey, Inc. (collectively, the “managers”), pursuant to which we may issue and sell the shares of our common stock having an aggregate offering price of up to $100.0 million from time to time through the managers, acting as sales agents and/or principals (the “ATM Program”). The sales of shares of our common stock under the equity distribution agreements may be made in negotiated transactions or transactions that are deemed to be “at the market” offerings as defined in Rule 415 under the Securities Act. During the three months ended June 30, 2017, we issued an aggregate of 87,048 shares of our common stock through the ATM Program, generating proceeds of approximately $1.9 million, net of offering costs. We used the proceeds for general corporate purposes. As of June 30, 2017, we had approximately $98.1 million of gross sales of our common stock available under the ATM Program. |
Earnings Per Share
Earnings Per Share | 6 Months Ended |
Jun. 30, 2017 | |
Earnings Per Share [Abstract] | |
Earnings Per Share | 8. Earnings Per Share Basic earnings or loss per share of common stock (“EPS”) is calculated by dividing net income attributable to common stockholders by the weighted average shares of common stock outstanding for the periods presented. Diluted EPS is computed after adjusting the basic EPS computation for the effect of dilutive common equivalent shares outstanding during the periods presented. Unvested restricted shares, LTIP units and forward sales agreements shares are considered participating securities, which require the use of the two-class method for the computation of basic and diluted earnings per share. The following table sets forth the computation of the Company’s basic and diluted earnings per share of common stock for the three and six months ended June 30, 2017 and 2016 (amounts in thousands, except per share amounts): For the three months ended June 30, For the six months ended June 30, 2017 2016 2017 2016 Numerator Net income $ 1,013 $ 1,037 $ 2,363 $ 2,146 Less: Non-controlling interest in Operating Partnership (186 ) (338 ) (452 ) (772 ) Net income available to Easterly Government Properties, Inc. 827 699 1,911 1,374 Less: Dividends on participating securities (28 ) (25 ) (54 ) (51 ) Net income available to common stockholders $ 799 $ 674 $ 1,857 $ 1,323 Denominator for basic EPS 37,408,603 27,484,075 37,151,527 25,812,893 Dilutive effect of share-based compensation awards 8,191 11,629 6,992 12,753 Dilutive effect of LTIP units 1,873,429 1,638,738 1,856,030 1,625,785 Dilutive effect of forward sales agreements shares 555,091 132,816 520,444 86,992 Denominator for diluted EPS 39,845,314 29,267,258 39,534,993 27,538,423 Basic EPS $ 0.02 $ 0.02 $ 0.05 $ 0.05 Diluted EPS $ 0.02 $ 0.02 $ 0.05 $ 0.05 |
Operating Leases
Operating Leases | 6 Months Ended |
Jun. 30, 2017 | |
Leases [Abstract] | |
Operating Leases | 9. Operating Leases Our rental properties are subject to generally non-cancelable operating leases generating future minimum contractual rent payments due from tenants. As of June 30, 2017, future non-cancelable minimum contractual rent payments are as follows (dollars in thousands): Payments due by period Total 2017 2018 2019 2020 2021 Thereafter Operating Leases Minimum lease payments $ 755,816 48,206 88,620 84,550 77,864 68,385 388,191 The Company’s consolidated operating properties were 100% occupied by 24 tenants at June 30, 2017. For the six months ended June 30, 2017 we recognized $48.4 million in rental income attributable to base rent, $4.2 million in rental income attributable to the amortization of our above- and below-market leases and a straight-line adjustment of $0.5 million. |
Commitments and Contingencies
Commitments and Contingencies | 6 Months Ended |
Jun. 30, 2017 | |
Commitments And Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | 10. Commitments and Contingencies We sublease 5,682 square feet of office space in Washington, D.C. under a sublease agreement with a commencement date of March 2016 and expiration date of June 2021. We also lease 5,752 square feet of office space in San Diego, CA under an operating lease that commenced February 2015 and expires in April 2022. For the six months ended June 30, 2017 rent expense incurred under the terms of the corporate office leases, was $0.2 million. Future minimum rental payments under the Company’s corporate office leases as of June 30, 2017 are summarized as follows (dollars in thousands): Payments due by period Total 2017 2018 2019 2020 2021 Thereafter Corporate office leases Minimum lease payments $ 2,079 225 462 479 496 352 65 |
Concentrations Risk
Concentrations Risk | 6 Months Ended |
Jun. 30, 2017 | |
Risks And Uncertainties [Abstract] | |
Concentrations Risk | 11. Concentrations Risk Concentrations of credit risk arise for the Company when multiple tenants of the Company are engaged in similar business activities, are located in the same geographic region or have similar economic features that impact in a similar manner their ability to meet contractual obligations, including those to the Company. The Company regularly monitors its tenant base to assess potential concentrations of credit risk. As stated in Note 1 above, the Company leases commercial space to the U.S. Government or nongovernmental tenants. At June 30, 2017, the U.S Government accounted for approximately 97.4% of rental income and non-governmental tenants accounted for the remaining approximately 2.6%. Fourteen of our 45 operating properties are located in California, accounting for approximately 27.1% of our total rentable square feet and approximately 35.9% of our total annualized lease income as of June 30, 2017. In addition, we owned one property under development located in California. To the extent that weak economic or real estate conditions or natural disasters affect California more severely than other areas of the country, our business, financial condition and results of operations could be significantly impacted. |
Subsequent Events
Subsequent Events | 6 Months Ended |
Jun. 30, 2017 | |
Subsequent Events [Abstract] | |
Subsequent Events | 12. Subsequent Events For its consolidated financial statements as of June 30, 2017, the Company evaluated subsequent events and noted no significant events. |
Summary of Significant Accoun19
Summary of Significant Accounting Policies (Policies) | 6 Months Ended |
Jun. 30, 2017 | |
Accounting Policies [Abstract] | |
Recently Adopted Accounting Pronouncements | Recently Adopted Accounting Pronouncements On January 1, 2017, the Company adopted ASU 2017-01, Business Combinations (Topic 805), which clarifies the framework for determining whether an integrated set of assets and activities meets the definition of a business. The revised framework establishes a screen for determining whether an integrated set of assets and activities is a business and narrows the definition of a business, which is expected to result in fewer transactions being accounted for as business combinations. Acquisitions of integrated sets of assets and activities that do not meet the definition of a business are accounted for as asset acquisitions. As a result the Company believes most of our future acquisitions of operating properties will qualify as asset acquisitions and third-party transaction costs associated with these acquisitions will be capitalized while internal acquisition costs will continue to be expensed. On January 1, 2017, the Company adopted ASU No. 2016-09, Compensation – Stock Compensation, which identifies areas for simplification involving several aspects of accounting for share-based payment transactions. The new guidance allows for entities to make an entity-wide accounting policy election to either estimate the number of awards that are expected to vest or account for forfeitures when they occur. In addition, the guidance allows employers to withhold shares to satisfy minimum statutory tax withholding requirements up to the employees’ maximum individual tax rate without causing the award to be classified as a liability. The guidance also stipulates that cash paid by an employer to a taxing authority when directly withholding shares for tax-withholding purposes should be classified as a financing activity on the statement of cash flows. The implementation of this update did not have a material impact in our consolidated financial statements. |
Recent Accounting Pronouncements Not Yet Adopted | Recent Accounting Pronouncements Not Yet Adopted In May 2014, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2014-09, Revenue from Contracts with Customers, which requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers and will replace most existing revenue recognition guidance when it becomes effective. This amendment applies to all contracts with customers except those that are within the scope of other topics in the FASB ASC (“Accounting Standards Codification”). In July 2015, the FASB issued ASU 2015-14 which deferred the effective date of ASU 2014-09 by one year to annual reporting periods beginning after December 15, 2017, including interim periods within that reporting period. The Company will adopt ASU 2014-09 and the related updates subsequently issued by the FASB in January 2018 using one of two methods: retrospective restatement for each reporting period presented at the time of adoption, or retrospectively with the cumulative effect of initially applying this guidance recognized at the date of initial application. The Company has not decided which method of adoption we will use. The Company is continuing to evaluate ASU No. 2014-09, additional information about the Company’s revenue streams and other considerations are summarized below. Rental income from real property is derived from rental agreements, whereby 42 of the Company’s operating properties are leased primarily to the U.S. Government and three of the Company’s operating properties are entirely leased to private tenants. Rental income from real property is specifically excluded from ASU 2014-09. Tenant reimbursements – is comprised of tenant reimbursements from real estate taxes, and certain other expenses, as well as tenant project reimbursements that consist primarily of subcontracted costs that are reimbursed to us by the tenant. Other income – is comprised primarily of the management fee income associated with tenant project reimbursements. In February 2016, the FASB issued ASU No. 2016-02, Leases, which sets out the principles for the recognition, measurement, presentation and disclosure of leases for both parties to a contract (i.e., lessees and lessors). The new standard requires lessees to apply a dual approach, classifying leases as either finance or operating leases based on the principle of whether or not the lease is effectively a financed purchase of the leased asset by the lessee. This classification will determine whether the lease expense is recognized based on an effective interest method or on a straight-line basis over the term of the lease. A lessee is also required to record a right-of-use asset and a lease liability for all leases with a term of greater than 12 months regardless of their classification. Leases with a term of 12 months or less will be accounted for in the same manner as operating leases today. As of June 30, 2017, the Company had a sublease for office space in Washington D.C. expiring in June 2021 and a lease for office space in San Diego, CA expiring in April 2022. The remaining contractual payments under the Company’s lease and sublease for office space aggregate $2.1 million. Additionally, ASU 2016-02 will require that lessees and lessors capitalize, as initial direct costs, only those costs that are incurred due to the execution of a lease. Under ASU 2016-02, allocated payroll costs and other costs that are incurred regardless of whether the lease is obtained will no longer be capitalized as initial direct costs and instead will be expensed as incurred. The new standard requires lessors to account for leases using an approach that is substantially equivalent to existing guidance for sales-type leases, direct financing leases and operating leases. ASU No. 2016-02 is effective for reporting periods beginning after December 15, 2018, with early adoption permitted. The standard permits the use of either the retrospective or modified retrospective transition method. The Company is in the process of evaluating the impact of this new guidance. In August 2016, the FASB issued ASU No. 2016-15, Statement of Cash Flows (Topic 230), which provides classification guidance for certain cash receipts and cash payments including payment of debt extinguishment costs, settlement of zero-coupon debt instruments, insurance claim payments and distributions from equity method investees. The standard is effective on January 1, 2018, with early adoption permitted. The Company is in the process of evaluating the impact of this new guidance. In November 2016, the FASB issued ASU No. 2016-18, Statement of Cash Flows (Topic 230), which requires that the statement of cash flows explain the change during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. Therefore, amounts generally described as restricted cash and restricted cash equivalents should be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows. The standard is effective on January 1, 2018, with early adoption permitted. The Company is in the process of evaluating the impact of this new guidance. In February 2017, the FASB issued ASU No. 2017-05, Other Income-Gains and Losses from the Derecognition of Nonfinancial Assets (Subtopic 610-20): Clarifying the Scope of Asset Derecognition Guidance and Accounting for Partial Sales of Nonfinancial Assets. This ASU clarifies the scope and accounting of a financial asset that meets the definition of an “in-substance nonfinancial asset” and defines the term “in-substance nonfinancial asset.” This ASU also adds guidance for partial sales of nonfinancial assets. ASU 2017-05 will be effective at the same time ASU No. 2014-09 |
Real Estate and Intangibles (Ta
Real Estate and Intangibles (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Real Estate [Abstract] | |
Fair Values of Assets Acquired and Liabilities Assumed | During the six months ended June 30, 2017, we acquired two operating properties, OSHA – Sandy and VA – Loma Linda, in asset acquisitions for an aggregate purchase price of $249.6 million, of which VA – Loma Linda comprised $212.6 million. We allocated the purchase price of the acquisition based on the estimated fair values of the acquired assets and assumed liabilities as follows (dollars in thousands): Total Real estate Land $ 14,837 Building 208,004 Acquired tenant improvements 927 Total real estate 223,768 Intangible assets In-place leases 17,676 Acquired leasing commissions 9,402 Total intangible assets 27,078 Intangible liabilities Below-market leases (1,255 ) Total intangible liabilities (1,255 ) Purchase price $ 249,591 |
Proforma Financial Information of Future Operating Results | The pro forma information is not necessarily indicative of the results that actually would have occurred nor does it intend to indicate future operating results (dollars in thousands): For the six months ended Proforma (unaudited) June 30, 2016 Total rental revenue $ 49,940 Net income (loss) (1) 2,996 (1) The net income for the six months ended June 30, 2016 excludes $0.7 million of property acquisition costs. |
Schedule of Real Estate and Intangibles | Real estate and intangibles consisted of the following as of June 30, 2017 (dollars in thousands): Total Real estate properties, net Land $ 127,660 Building 993,657 Acquired tenant improvements 40,863 Construction in progress 8,498 Accumulated amortization (53,639 ) Total Real estate properties, net $ 1,117,039 Intangible assets, net In-place leases $ 140,338 Acquired leasing commissions 32,586 Above market leases 10,631 Accumulated amortization (56,428 ) Total Intangible assets, net $ 127,127 Intangible liabilities, net Below market leases $ (57,753 ) Accumulated amortization 19,578 Total Intangible liabilities, net $ (38,175 ) |
Debt (Tables)
Debt (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Debt Disclosure [Abstract] | |
Summary of Borrowings | At June 30, 2017, our borrowings consisted of the following (dollars in thousands): Loan Principal Outstanding Interest Rate (1) Maturity Date Revolving credit facility: Senior unsecured revolving credit facility (2) $ 68,000 L + 140bps February 2019 (3) Total revolving credit facility 68,000 Term loan facility: Senior unsecured term loan facility 100,000 3.12% (4) September 2023 Total term loan facility 100,000 Less: Total unamortized deferred financing fees (868 ) Total term loan facility, net 99,132 Notes payable: Senior unsecured notes payable, series A 95,000 4.05% May 2027 Senior unsecured notes payable, series B 50,000 4.15% May 2029 Senior unsecured notes payable, series C 30,000 4.30% May 2032 Total notes payable 175,000 Less: Total unamortized deferred financing fees (1,354 ) Total notes payable, net 173,646 Mortgage notes payable: CBP - Savannah 14,562 3.40% (5) July 2033 ICE - Charleston 20,369 4.21% (5) January 2027 MEPCOM - Jacksonville 11,234 4.41% (5) October 2025 USFS II - Albuquerque 17,044 4.46% (5) July 2026 DEA - Pleasanton 15,700 L + 150bps (5) October 2023 VA - Loma Linda 127,500 3.59% July 2027 Total mortgage notes payable 206,409 Less: Total unamortized deferred financing fees (2,045 ) Less: Total unamortized premium/discount 418 Total mortgage notes payable, net 204,782 Total debt 545,560 (1) At June 30, 2017, the one-month LIBOR (“L”) was 1.23%. 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 the Company's senior unsecured revolving credit facility and senior unsecured term loan facility is based on the Company's consolidated leverage ratio, as defined in the respective loan agreements. (2) Available capacity of $332.0 million at June 30, 2017 with an accordion feature that provides additional capacity of $250.0 million, for a total facility size of not more than $650.0 million. (3) Credit facility has two six-month as-of-right extension options subject to certain conditions and the payment of an extension fee. (4) Entered into two interest rate swaps with an effective date of March 29, 2017 with an aggregate notional value of $100 million to effectively fix the interest rate at 3.12% annually. (5) Effective interest rates are as follows: CBP - Savannah 4.12%, ICE - Charleston 3.93% , MEPCOM - Jacksonville 3.89%, USFS II - Albuquerque 3.92%, DEA - Pleasanton 1.8%. |
Costs Included in Interest Expense Related to Company's Debt Arrangements | The table below sets forth the costs included in interest expense related to the Company's debt arrangements on the accompanying Consolidated Statement of Operations for the three and six months ended June 30, 2017 and 2016 (dollars in thousands): For the three months ended June 30, For the six months ended June 30, Costs Included in Interest Expense 2017 2016 2017 2016 Amortization of deferred financing fees $ 265 $ 216 $ 516 $ 432 |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Fair Value Disclosures [Abstract] | |
Schedule of Assets and Liabilities Measured at Fair Value on Recurring Basis | The table below presents the Company’s assets and liabilities measured at fair value on a recurring basis as of June 30, 2017, aggregated by the level in the fair value hierarchy within which those measurements fall. As of June 30, 2017 Balance Sheet Line Item Level 1 Level 2 Level 3 Interest rate swaps - Asset $ — $ 3,199 $ — |
Equity (Tables)
Equity (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Equity [Abstract] | |
Summary of Changes In Stockholders' Equity | The following table summarizes the changes in our stockholders’ equity for the six months ended June 30, 2017 and 2016 (dollars in thousands): Shares Common Stock Par Value Additional Paid-in Capital Retained Earnings (Deficit) Cumulative Dividends Accumulated Other Comprehensive Income Non- controlling Interest in Operating Partnership Total Equity Six months ended June 30, 2017 Balance at December 31, 2016 36,874,810 $ 369 $ 596,971 $ 1,721 $ (42,794 ) $ 3,038 $ 137,561 $ 696,866 Stock based compensation — 158 — — — 1,309 1,467 Dividends and distributions paid — — — (18,432 ) — (4,132 ) (22,564 ) Grant of unvested restricted stock 17,912 — — — — — — — Redemption of common units for shares of common stock 1,325,331 13 19,853 — — — (19,866 ) — Issuance of common stock 87,048 1 1,861 — — — — 1,862 Unrealized loss on interest rate swaps — — — — (377 ) (209 ) (586 ) Net income — — 1,911 — — 452 2,363 Allocation of non-controlling interest in Operating Partnership — 825 — — — (825 ) — Balance at June 30, 2017 38,305,101 $ 383 $ 619,668 $ 3,632 $ (61,226 ) $ 2,661 $ 114,290 $ 679,408 Six months ended June 30, 2016 Balance at December 31, 2015 24,168,379 $ 241 $ 391,767 $ (1,694 ) $ (13,051 ) $ — $ 242,631 $ 619,894 Stock based compensation — 145 — — — 1,277 1,422 Dividends and distributions paid — — — (12,806 ) — (6,195 ) (19,001 ) Grant of unvested restricted stock 16,128 — — — — — — — Redemption of common units for shares of common stock 5,745,028 58 88,616 — — — (88,674 ) — Public offering 4,719,045 47 80,813 — — — — 80,860 Net income — — 1,374 — — 772 2,146 Allocation of non-controlling interest in Operating Partnership — (1,269 ) — — — 1,269 — Balance at June 30, 2016 34,648,580 $ 346 $ 560,072 $ (320 ) $ (25,857 ) $ — $ 151,080 $ 685,321 |
Summary of Shares of Restricted Common Stock and Long-term Incentive Plan Units in Operating Partnership Awards | A summary of our shares of restricted common stock and long-term incentive plan units in the Operating Partnership (“LTIP units”) awards at June 30, 2017 is as follows: Restricted Shares Restricted Shares Weighted Average Grant Date Fair Value Per Share LTIP Units LTIP Units Weighted Average Grant Date Fair Value Per Share Outstanding, December 31, 2016 16,128 $ 18.60 926,000 $ 8.91 Vested (16,128 ) 18.60 — — Granted 17,912 19.72 — — Forfeited — — — — Outstanding, June 30, 2017 17,912 $ 19.72 926,000 $ 8.91 |
Earnings Per Share (Tables)
Earnings Per Share (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Earnings Per Share [Abstract] | |
Summary of Basic and Diluted Earnings Per Common Share | The following table sets forth the computation of the Company’s basic and diluted earnings per share of common stock for the three and six months ended June 30, 2017 and 2016 (amounts in thousands, except per share amounts): For the three months ended June 30, For the six months ended June 30, 2017 2016 2017 2016 Numerator Net income $ 1,013 $ 1,037 $ 2,363 $ 2,146 Less: Non-controlling interest in Operating Partnership (186 ) (338 ) (452 ) (772 ) Net income available to Easterly Government Properties, Inc. 827 699 1,911 1,374 Less: Dividends on participating securities (28 ) (25 ) (54 ) (51 ) Net income available to common stockholders $ 799 $ 674 $ 1,857 $ 1,323 Denominator for basic EPS 37,408,603 27,484,075 37,151,527 25,812,893 Dilutive effect of share-based compensation awards 8,191 11,629 6,992 12,753 Dilutive effect of LTIP units 1,873,429 1,638,738 1,856,030 1,625,785 Dilutive effect of forward sales agreements shares 555,091 132,816 520,444 86,992 Denominator for diluted EPS 39,845,314 29,267,258 39,534,993 27,538,423 Basic EPS $ 0.02 $ 0.02 $ 0.05 $ 0.05 Diluted EPS $ 0.02 $ 0.02 $ 0.05 $ 0.05 |
Operating Leases (Tables)
Operating Leases (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Leases [Abstract] | |
Summary of Future Non Cancellable Minimum Contractual Rent Payments | Our rental properties are subject to generally non-cancelable operating leases generating future minimum contractual rent payments due from tenants. As of June 30, 2017, future non-cancelable minimum contractual rent payments are as follows (dollars in thousands): Payments due by period Total 2017 2018 2019 2020 2021 Thereafter Operating Leases Minimum lease payments $ 755,816 48,206 88,620 84,550 77,864 68,385 388,191 |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Summary of Future Non Cancellable Minimum Contractual Rent Payments | Our rental properties are subject to generally non-cancelable operating leases generating future minimum contractual rent payments due from tenants. As of June 30, 2017, future non-cancelable minimum contractual rent payments are as follows (dollars in thousands): Payments due by period Total 2017 2018 2019 2020 2021 Thereafter Operating Leases Minimum lease payments $ 755,816 48,206 88,620 84,550 77,864 68,385 388,191 |
Corporate Office Leases [Member] | |
Summary of Future Non Cancellable Minimum Contractual Rent Payments | Future minimum rental payments under the Company’s corporate office leases as of June 30, 2017 are summarized as follows (dollars in thousands): Payments due by period Total 2017 2018 2019 2020 2021 Thereafter Corporate office leases Minimum lease payments $ 2,079 225 462 479 496 352 65 |
Organization and Basis of Pre27
Organization and Basis of Presentation - Additional Information (Detail) ft² in Millions | 6 Months Ended |
Jun. 30, 2017ft²Property | |
Organization And Significant Accounting Policies [Line Items] | |
Outstanding common units of aggregate limited partnership interest owned percentage | 83.20% |
Wholly Owned Operating Properties [Member] | |
Organization And Significant Accounting Policies [Line Items] | |
Number of properties | 45 |
Aggregate area of land | ft² | 3.5 |
Wholly Owned Operating Properties [Member] | Government [Member] | |
Organization And Significant Accounting Policies [Line Items] | |
Number of properties | 42 |
Wholly Owned Operating Properties [Member] | Private Tenants [Member] | |
Organization And Significant Accounting Policies [Line Items] | |
Number of properties | 3 |
Wholly Owned Properties Under Development [Member] | |
Organization And Significant Accounting Policies [Line Items] | |
Number of properties | 2 |
Aggregate area of land | ft² | 0.1 |
Summary of Significant Accoun28
Summary of Significant Accounting Policies - Additional Information (Detail) $ in Thousands | 6 Months Ended |
Jun. 30, 2017USD ($)Property | |
Accounting Policies [Line Items] | |
Remaining contractual payments under lease and sublease for office space | $ | $ 755,816 |
Corporate Office Leases [Member] | |
Accounting Policies [Line Items] | |
Remaining contractual payments under lease and sublease for office space | $ | $ 2,079 |
DISTRICT OF COLUMBIA | Sublease [Member] | |
Accounting Policies [Line Items] | |
Operating lease agreement expire date | Jun. 30, 2021 |
California [Member] | |
Accounting Policies [Line Items] | |
Number of properties | 14 |
California [Member] | San Diego [Member] | |
Accounting Policies [Line Items] | |
Operating lease agreement expire date | Apr. 30, 2022 |
ASU 2014-09 [Member] | Government [Member] | |
Accounting Policies [Line Items] | |
Number of properties | 42 |
ASU 2014-09 [Member] | Private Tenants [Member] | |
Accounting Policies [Line Items] | |
Number of properties | 3 |
Real Estate and Intangibles - A
Real Estate and Intangibles - Additional Information (Detail) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2017USD ($)Property | Jun. 30, 2016USD ($) | Jun. 30, 2017USD ($)Property | Jun. 30, 2016USD ($) | |
Real Estate Properties [Line Items] | ||||
Net income | $ 827 | $ 699 | $ 1,911 | $ 1,374 |
Acquisition-related expenses | $ 456 | $ 346 | $ 988 | $ 679 |
Operating Properties Acquired [Member] | ||||
Real Estate Properties [Line Items] | ||||
Number of properties | Property | 2 | 2 | ||
Purchase price | $ 249,591 | $ 249,591 | ||
Weighted average amortization period | 16 years 7 months 10 days | |||
Revenues | $ 2,600 | |||
Net income | 1,000 | |||
Acquisition-related expenses | 1,000 | |||
Internal costs related to acquisitions | 800 | |||
Operating Properties Acquired [Member] | OSHA – Sandy and VA – Loma Linda [Member] | ||||
Real Estate Properties [Line Items] | ||||
Purchase price | 249,600 | 249,600 | ||
Operating Properties Acquired [Member] | VA Loma Linda [Member] | ||||
Real Estate Properties [Line Items] | ||||
Purchase price | $ 212,600 | $ 212,600 |
Real Estate and Intangibles - F
Real Estate and Intangibles - Fair Values of Assets Acquired and Liabilities Assumed (Detail) - Operating Properties Acquired [Member] $ in Thousands | Jun. 30, 2017USD ($) |
Business Acquisition [Line Items] | |
Total real estate | $ 223,768 |
Total Intangibles | 27,078 |
Total intangible liabilities | (1,255) |
Purchase price | 249,591 |
Real Estate Investment [Member] | |
Business Acquisition [Line Items] | |
Land | 14,837 |
Building | 208,004 |
Acquired tenant improvements | 927 |
In-place leases [Member] | |
Business Acquisition [Line Items] | |
Total Intangibles | 17,676 |
Acquired Leasing Commissions [Member] | |
Business Acquisition [Line Items] | |
Total Intangibles | 9,402 |
Below Market Leases [Member] | |
Business Acquisition [Line Items] | |
Total intangible liabilities | $ (1,255) |
Real Estate and Intangibles - P
Real Estate and Intangibles - Proforma Financial Information of Future Operating Results (Detail) $ in Thousands | 6 Months Ended | |
Jun. 30, 2016USD ($) | ||
Real Estate [Abstract] | ||
Total rental revenue | $ 49,940 | |
Net income (loss) | $ 2,996 | [1] |
[1] | The net income for the six months ended June 30, 2016 excludes $0.7 million of property acquisition costs. |
Real Estate and Intangibles -32
Real Estate and Intangibles - Proforma Financial Information of Future Operating Results (Detail) (Parenthetical) $ in Millions | 6 Months Ended |
Jun. 30, 2016USD ($) | |
ICE – Albuquerque and NPS – Omaha | |
Real Estate Properties [Line Items] | |
Property acquisition costs | $ 0.7 |
Real Estate and Intangibles - S
Real Estate and Intangibles - Schedule of Real Estate and Intangibles (Detail) - USD ($) $ in Thousands | Jun. 30, 2017 | Dec. 31, 2016 |
Real estate properties, net | ||
Land | $ 127,660 | |
Building | 993,657 | |
Acquired tenant improvements | 40,863 | |
Construction in progress | 8,498 | |
Accumulated amortization | (53,639) | |
Total Real estate properties, net | 1,117,039 | $ 901,066 |
Intangible assets, net | ||
Accumulated amortization | (56,428) | |
Total Intangible assets, net | 127,127 | |
Intangible liabilities, net | ||
Intangible Liabilities, Below market leases | (57,753) | |
Intangible Liabilities, Accumulated amortization | 19,578 | |
Total Intangible liabilities, net | 38,175 | |
In-place leases [Member] | ||
Intangible assets, net | ||
Above market leases | 140,338 | |
Acquired Leasing Commissions [Member] | ||
Intangible assets, net | ||
Above market leases | 32,586 | |
Above Market Leases [Member] | ||
Intangible assets, net | ||
Above market leases | $ 10,631 |
Debt - Summary of Borrowings (D
Debt - Summary of Borrowings (Detail) - USD ($) $ in Thousands | 6 Months Ended | ||
Jun. 30, 2017 | Dec. 31, 2016 | ||
Debt Instrument [Line Items] | |||
Revolving credit facility | $ 68,000 | $ 212,167 | |
Less: Total unamortized deferred financing fees | (1,437) | (2,787) | |
Total term loan facility, net, Principal Outstanding | 99,132 | ||
Total notes payable, net, Principal Outstanding | 173,646 | ||
Total mortgage notes payable, net, Principal Outstanding | 204,782 | $ 80,806 | |
Total debt, Principal Outstanding | 545,560 | ||
Revolving Credit Facility [Member] | |||
Debt Instrument [Line Items] | |||
Revolving credit facility | 68,000 | ||
Term Loan Facility [Member] | |||
Debt Instrument [Line Items] | |||
Loan, Principal Outstanding | 100,000 | ||
Less: Total unamortized deferred financing fees | (868) | ||
Total term loan facility, net, Principal Outstanding | 99,132 | ||
Senior Unsecured Debt [Member] | Term Loan Facility [Member] | |||
Debt Instrument [Line Items] | |||
Loan, Principal Outstanding | $ 100,000 | ||
Loan, Interest Rate | [1],[2] | 3.12% | |
Loan, Maturity Date | 2023-09 | ||
Senior Unsecured Notes Payable [Member] | 4.05% Senior Notes, Series A, due May 25, 2027 [Member] | |||
Debt Instrument [Line Items] | |||
Loan, Principal Outstanding | $ 95,000 | ||
Loan, Interest Rate | [1] | 4.05% | |
Loan, Maturity Date | 2027-05 | ||
Senior Unsecured Notes Payable [Member] | 4.15% Senior Notes, Series B, due May 25, 2029 [Member] | |||
Debt Instrument [Line Items] | |||
Loan, Principal Outstanding | $ 50,000 | ||
Loan, Interest Rate | [1] | 4.15% | |
Loan, Maturity Date | 2029-05 | ||
Senior Unsecured Notes Payable [Member] | 4.30% Senior Notes, Series C, due May 25, 2032 [Member] | |||
Debt Instrument [Line Items] | |||
Loan, Principal Outstanding | $ 30,000 | ||
Loan, Interest Rate | [1] | 4.30% | |
Loan, Maturity Date | 2032-05 | ||
Notes Payable [Member] | |||
Debt Instrument [Line Items] | |||
Loan, Principal Outstanding | $ 175,000 | ||
Less: Total unamortized deferred financing fees | (1,354) | ||
Mortgage Notes Payable [Member] | |||
Debt Instrument [Line Items] | |||
Loan, Principal Outstanding | 206,409 | ||
Less: Total unamortized deferred financing fees | (2,045) | ||
Less: Total unamortized premium/discount | 418 | ||
Mortgage Notes Payable [Member] | CBP Savannah [Member] | |||
Debt Instrument [Line Items] | |||
Loan, Principal Outstanding | $ 14,562 | ||
Loan, Interest Rate | [1],[3] | 3.40% | |
Loan, Maturity Date | 2033-07 | ||
Mortgage Notes Payable [Member] | ICE Charleston [Member] | |||
Debt Instrument [Line Items] | |||
Loan, Principal Outstanding | $ 20,369 | ||
Loan, Interest Rate | [1],[3] | 4.21% | |
Loan, Maturity Date | 2027-01 | ||
Mortgage Notes Payable [Member] | MEPCOM Jacksonville [Member] | |||
Debt Instrument [Line Items] | |||
Loan, Principal Outstanding | $ 11,234 | ||
Loan, Interest Rate | [1],[3] | 4.41% | |
Loan, Maturity Date | 2025-10 | ||
Mortgage Notes Payable [Member] | USFS II Albuquerque [Member] | |||
Debt Instrument [Line Items] | |||
Loan, Principal Outstanding | $ 17,044 | ||
Loan, Interest Rate | [1],[3] | 4.46% | |
Loan, Maturity Date | 2026-07 | ||
Mortgage Notes Payable [Member] | DEA Pleasanton [Member] | |||
Debt Instrument [Line Items] | |||
Loan, Principal Outstanding | $ 15,700 | ||
Loan, Interest Rate | [1],[3] | L + 150bps | |
Loan, Maturity Date | 2023-10 | ||
Mortgage Notes Payable [Member] | VA Loma Linda [Member] | |||
Debt Instrument [Line Items] | |||
Loan, Principal Outstanding | $ 127,500 | ||
Loan, Interest Rate | [1] | 3.59% | |
Loan, Maturity Date | 2027-07 | ||
Senior Unsecured Debt [Member] | Revolving Credit Facility [Member] | |||
Debt Instrument [Line Items] | |||
Revolving credit facility | [4] | $ 68,000 | |
Loan, Interest Rate | [1],[4] | L + 140bps | |
Loan, Maturity Date | [4],[5] | 2019-02 | |
[1] | At June 30, 2017, the one-month LIBOR (“L”) was 1.23%. 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 the Company's senior unsecured revolving credit facility and senior unsecured term loan facility is based on the Company's consolidated leverage ratio, as defined in the respective loan agreements. | ||
[2] | Entered into two interest rate swaps with an effective date of March 29, 2017 with an aggregate notional value of $100 million to effectively fix the interest rate at 3.12% annually. | ||
[3] | Effective interest rates are as follows: CBP - Savannah 4.12%, ICE - Charleston 3.93% , MEPCOM - Jacksonville 3.89%, USFS II - Albuquerque 3.92%, DEA - Pleasanton 1.8%. | ||
[4] | Available capacity of $332.0 million at June 30, 2017 with an accordion feature that provides additional capacity of $250.0 million, for a total facility size of not more than $650.0 million. | ||
[5] | Credit facility has two six-month as-of-right extension options subject to certain conditions and the payment of an extension fee. |
Debt - Summary of Borrowings (P
Debt - Summary of Borrowings (Parenthetical) (Detail) | 6 Months Ended | |
Jun. 30, 2017USD ($)Swap | Mar. 29, 2017USD ($)Swap | |
Mortgage Notes Payable [Member] | CBP Savannah [Member] | ||
Debt Instrument [Line Items] | ||
Effective interest rate | 4.12% | |
Mortgage Notes Payable [Member] | ICE Charleston [Member] | ||
Debt Instrument [Line Items] | ||
Effective interest rate | 3.93% | |
Mortgage Notes Payable [Member] | MEPCOM Jacksonville [Member] | ||
Debt Instrument [Line Items] | ||
Effective interest rate | 3.89% | |
Mortgage Notes Payable [Member] | USFS II Albuquerque [Member] | ||
Debt Instrument [Line Items] | ||
Effective interest rate | 3.92% | |
Mortgage Notes Payable [Member] | DEA Pleasanton [Member] | ||
Debt Instrument [Line Items] | ||
Effective interest rate | 1.80% | |
Revolving Credit Facility [Member] | Senior Unsecured Debt [Member] | ||
Debt Instrument [Line Items] | ||
Amount available under revolving credit facility | $ 332,000,000 | |
Credit facility additional maximum borrowing capacity | 250,000,000 | |
Credit facility maximum borrowing capacity | $ 650,000,000 | |
Line of Credit Facility, Description | Credit facility has two six-month as-of-right extension options subject to certain conditions and the payment of an extension fee. | |
Senior Unsecured Term Loan Facility [Member] | Interest Rate Swaps [Member] | ||
Debt Instrument [Line Items] | ||
Number of forward interest rate swaps | Swap | 2 | 2 |
Aggregate notional value of interest rate swaps | $ 100,000,000 | $ 100,000,000 |
Forward swaps interest rate | 3.12% | 3.12% |
LIBOR [Member] | ||
Debt Instrument [Line Items] | ||
Loan, interest rate | 1.23% |
Debt - Costs Included in Intere
Debt - Costs Included in Interest Expense Related to Company's Debt Arrangements (Detail) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | |
Debt Disclosure [Abstract] | ||||
Amortization of deferred financing fees | $ 265 | $ 216 | $ 516 | $ 432 |
Debt - Additional Information (
Debt - Additional Information (Detail) - USD ($) | May 25, 2017 | Jun. 30, 2017 | Jun. 28, 2017 |
Debt Instrument [Line Items] | |||
Fair value of notes payable | $ 177,900,000 | ||
Senior Unsecured Notes Payable [Member] | |||
Debt Instrument [Line Items] | |||
Percentage of principal amount prepaid with accrued interest | 100.00% | ||
Senior Unsecured Notes Payable [Member] | Minimum [Member] | |||
Debt Instrument [Line Items] | |||
Percentage of aggregate principal amount prepaid | 5.00% | ||
Senior Unsecured Notes Payable [Member] | Private Placement [Member] | |||
Debt Instrument [Line Items] | |||
Debt instrument, face amount | $ 175,000,000 | ||
Mortgage Notes Payable [Member] | |||
Debt Instrument [Line Items] | |||
Fair value of debt | $ 205,200,000 | ||
Mortgage Notes Payable [Member] | VA Loma Linda [Member] | |||
Debt Instrument [Line Items] | |||
Debt instrument, face amount | $ 127,500,000 |
Derivative and Hedging Activiti
Derivative and Hedging Activities - Additional Information (Detail) | 6 Months Ended | ||
Jun. 30, 2017USD ($)Swap | Mar. 29, 2017USD ($)Swap | Dec. 31, 2016USD ($) | |
Derivative [Line Items] | |||
Interest rate swaps | $ 3,199,000 | $ 3,785,000 | |
Unrealized loss recognized in accumulated other comprehensive income on interest rate swaps | 586,000 | ||
Loss reclassified from accumulated other comprehensive income into interest expense | 100,000 | ||
Gain (loss) on interest rate cash flow hedge ineffectiveness | 0 | ||
Credit risk related contingent features derivatives in a net liability position | 0 | ||
Maximum [Member] | |||
Derivative [Line Items] | |||
Estimates reclassified from accumulated other comprehensive income increase to interest expense over the next 12 months | $ 100,000 | ||
Interest Rate Swaps [Member] | Senior Unsecured Term Loan Facility [Member] | |||
Derivative [Line Items] | |||
Number of forward interest rate swaps | Swap | 2 | 2 | |
Aggregate notional value of interest rate swaps | $ 100,000,000 | $ 100,000,000 | |
Forward swaps effective date | Mar. 29, 2017 | ||
Maturity of senior unsecured term loan facility | Sep. 29, 2023 | ||
Forward swaps interest rate | 3.12% | 3.12% | |
Forward interest rate swap description | The forward swaps effectively fix the interest rate under our senior unsecured term loan facility at 3.12% annually based on the Company’s current consolidated leverage ratio and a variable interest rate of one-month LIBOR. | ||
Variable interest rate receive on interest rate swaps | one-month LIBOR |
Fair Value Measurements - Sched
Fair Value Measurements - Schedule of Assets and Liabilities Measured at Fair Value on Recurring Basis (Detail) - USD ($) $ in Thousands | Jun. 30, 2017 | Dec. 31, 2016 |
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||
Interest rate swaps - Asset | $ 3,199 | $ 3,785 |
Fair Value Measured on Recurring Basis [Member] | Level 2 [Member] | ||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||
Interest rate swaps - Asset | $ 3,199 |
Equity - Summary of Changes In
Equity - Summary of Changes In Stockholders' Equity (Detail) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | |
Shareholders Equity [Line Items] | ||||
Balance | $ 696,866 | $ 619,894 | ||
Stock based compensation | 1,467 | 1,422 | ||
Dividends and distributions paid | (22,564) | (19,001) | ||
Issuance of common stock | 1,862 | |||
Unrealized loss on interest rate swaps | $ (694) | (586) | ||
Public offering | 80,860 | |||
Net income | 1,013 | $ 1,037 | 2,363 | 2,146 |
Balance | $ 679,408 | 685,321 | $ 679,408 | 685,321 |
Balance (in shares) | 38,305,101 | 38,305,101 | ||
Common Stock Par Value [Member] | ||||
Shareholders Equity [Line Items] | ||||
Balance | $ 369 | $ 241 | ||
Balance (in shares) | 36,874,810 | 24,168,379 | ||
Grant of unvested restricted stock (in share) | 17,912 | 16,128 | ||
Redemption of common units for shares of common stock | $ 13 | $ 58 | ||
Redemption of common units for shares of common stock (in share) | 1,325,331 | 5,745,028 | ||
Issuance of common stock | $ 1 | |||
Issuance of common stock (in share) | 87,048 | |||
Public offering | $ 47 | |||
Public offering (in share) | 4,719,045 | |||
Balance | $ 383 | $ 346 | $ 383 | $ 346 |
Balance (in shares) | 38,305,101 | 34,648,580 | 38,305,101 | 34,648,580 |
Additional Paid-in Capital [Member] | ||||
Shareholders Equity [Line Items] | ||||
Balance | $ 596,971 | $ 391,767 | ||
Stock based compensation | 158 | 145 | ||
Redemption of common units for shares of common stock | 19,853 | 88,616 | ||
Issuance of common stock | 1,861 | |||
Public offering | 80,813 | |||
Allocation of non-controlling interest in Operating Partnership | 825 | (1,269) | ||
Balance | $ 619,668 | $ 560,072 | 619,668 | 560,072 |
Retained Earnings (Deficit) [Member] | ||||
Shareholders Equity [Line Items] | ||||
Balance | 1,721 | (1,694) | ||
Net income | 1,911 | 1,374 | ||
Balance | 3,632 | (320) | 3,632 | (320) |
Cumulative Dividends [Member] | ||||
Shareholders Equity [Line Items] | ||||
Balance | (42,794) | (13,051) | ||
Dividends and distributions paid | (18,432) | (12,806) | ||
Balance | (61,226) | (25,857) | (61,226) | (25,857) |
Accumulated Other Comprehensive Income [Member] | ||||
Shareholders Equity [Line Items] | ||||
Balance | 3,038 | |||
Unrealized loss on interest rate swaps | (377) | |||
Balance | 2,661 | 2,661 | ||
Non-controlling Interest in Operating Partnership [Member] | ||||
Shareholders Equity [Line Items] | ||||
Balance | 137,561 | 242,631 | ||
Stock based compensation | 1,309 | 1,277 | ||
Dividends and distributions paid | (4,132) | (6,195) | ||
Redemption of common units for shares of common stock | (19,866) | (88,674) | ||
Unrealized loss on interest rate swaps | (209) | |||
Net income | 452 | 772 | ||
Allocation of non-controlling interest in Operating Partnership | (825) | 1,269 | ||
Balance | $ 114,290 | $ 151,080 | $ 114,290 | $ 151,080 |
Equity - Additional Information
Equity - Additional Information (Detail) - USD ($) | Sep. 27, 2017 | Aug. 02, 2017 | May 03, 2017 | Mar. 27, 2017 | Mar. 08, 2017 | Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | Dec. 31, 2016 |
Stockholders Equity Note Disclosure [Line Items] | ||||||||||
Unrecognized compensation expense | $ 3,100,000 | $ 3,100,000 | ||||||||
Common Stock, shares issued | 38,305,101 | 38,305,101 | 36,874,810 | |||||||
Dividends per share | $ 0.25 | $ 0.25 | $ 0.23 | $ 0.49 | $ 0.45 | |||||
Dividends payable, date of record | Jun. 14, 2017 | |||||||||
Dividends, date paid | Jun. 29, 2017 | |||||||||
Operating partnership dividend rate percentage | 10.00% | |||||||||
Issuance of common shares | $ 1,886,000 | $ 84,943,000 | ||||||||
Maximum [Member] | ||||||||||
Stockholders Equity Note Disclosure [Line Items] | ||||||||||
Aggregate offering price of shares of common stock that the Company may issue and sell | $ 100,000,000 | |||||||||
Subsequent Event [Member] | ||||||||||
Stockholders Equity Note Disclosure [Line Items] | ||||||||||
Dividends per share | $ 0.25 | |||||||||
Dividends payable, date of record | Sep. 13, 2017 | |||||||||
Operating partnership dividend rate percentage | 10.00% | |||||||||
Dividends payable, date to be paid | Sep. 28, 2017 | |||||||||
Underwritten Public Offering [Member] | ||||||||||
Stockholders Equity Note Disclosure [Line Items] | ||||||||||
Common Stock, shares issued | 4,945,000 | |||||||||
Common stock shares sold with option to purchase additional shares | 645,000 | |||||||||
Underwritten Public Offering [Member] | Scenario Forecast [Member] | ||||||||||
Stockholders Equity Note Disclosure [Line Items] | ||||||||||
Gross proceeds from offering of shares to forward purchasers | $ 94,000,000 | |||||||||
Initial Public Offering [Member] | ||||||||||
Stockholders Equity Note Disclosure [Line Items] | ||||||||||
Redemption of common units to common stock (in share) | 1,325,331 | |||||||||
2015 Equity Incentive Plan [Member] | ||||||||||
Stockholders Equity Note Disclosure [Line Items] | ||||||||||
Compensation expense recognized | $ 1,500,000 | |||||||||
2015 Equity Incentive Plan [Member] | Employee [Member] | ||||||||||
Stockholders Equity Note Disclosure [Line Items] | ||||||||||
Restricted common stock issued | 2,692 | |||||||||
Restricted common stock grants, vesting description | The restricted common stock grants will vest upon the second anniversary of the grant date so long as the grantee remains an employee of the Company on such date. | |||||||||
2015 Equity Incentive Plan [Member] | Non-employee Director [Member] | ||||||||||
Stockholders Equity Note Disclosure [Line Items] | ||||||||||
Restricted common stock issued | 15,220 | |||||||||
Restricted common stock grants, vesting description | The restricted common stock grants will vest upon the earlier of the anniversary of the date of grant or the next annual stockholder meeting. | |||||||||
ATM Program | ||||||||||
Stockholders Equity Note Disclosure [Line Items] | ||||||||||
Common stock shares issued | 87,048 | |||||||||
Issuance of common shares | $ 1,900,000 | |||||||||
Gross sale of common stock available for grant | $ 98,100,000 | $ 98,100,000 |
Equity - Summary of Shares of R
Equity - Summary of Shares of Restricted Common Stock and Long-term Incentive Plan Units in Operating Partnership Awards (Detail) | 6 Months Ended |
Jun. 30, 2017$ / sharesshares | |
Restricted Shares [Member] | |
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |
Shares/Units, Outstanding beginning balance | shares | 16,128 |
Shares/Units, Vested | shares | (16,128) |
Shares/Units, Granted | shares | 17,912 |
Shares/Units, Outstanding ending balance | shares | 17,912 |
Weighted Average Grant Date Fair Value Per Share, Outstanding beginning balance | $ / shares | $ 18.60 |
Weighted Average Grant Date Fair Value Per Share, Vested | $ / shares | 18.60 |
Weighted Average Grant Date Fair Value Per Share, Granted | $ / shares | 19.72 |
Weighted Average Grant Date Fair Value Per Share, Outstanding ending balance | $ / shares | $ 19.72 |
Long Term Incentive Plan [Member] | |
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |
Shares/Units, Outstanding beginning balance | shares | 926,000 |
Shares/Units, Outstanding ending balance | shares | 926,000 |
Weighted Average Grant Date Fair Value Per Share, Outstanding beginning balance | $ / shares | $ 8.91 |
Weighted Average Grant Date Fair Value Per Share, Outstanding ending balance | $ / shares | $ 8.91 |
Earnings Per Share - Summary of
Earnings Per Share - Summary of Basic and Diluted Earnings Per Common Share (Detail) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | |
Earnings Per Share Basic And Diluted [Line Items] | ||||
Net income | $ 1,013 | $ 1,037 | $ 2,363 | $ 2,146 |
Less: Non-controlling interest in Operating Partnership | (186) | (338) | (452) | (772) |
Net income available to Easterly Government Properties, Inc. | 827 | 699 | 1,911 | 1,374 |
Less: Dividends on participating securities | (28) | (25) | (54) | (51) |
Net income available to common stockholders | $ 799 | $ 674 | $ 1,857 | $ 1,323 |
Denominator for basic EPS | 37,408,603 | 27,484,075 | 37,151,527 | 25,812,893 |
Denominator for diluted EPS | 39,845,314 | 29,267,258 | 39,534,993 | 27,538,423 |
Basic EPS | $ 0.02 | $ 0.02 | $ 0.05 | $ 0.05 |
Diluted EPS | $ 0.02 | $ 0.02 | $ 0.05 | $ 0.05 |
Stock Compensation Plan [Member] | ||||
Earnings Per Share Basic And Diluted [Line Items] | ||||
Dilutive effect | 8,191 | 11,629 | 6,992 | 12,753 |
Long Term Incentive Plan [Member] | ||||
Earnings Per Share Basic And Diluted [Line Items] | ||||
Dilutive effect | 1,873,429 | 1,638,738 | 1,856,030 | 1,625,785 |
Forward Sales Agreements [Member] | ||||
Earnings Per Share Basic And Diluted [Line Items] | ||||
Dilutive effect | 555,091 | 132,816 | 520,444 | 86,992 |
Operating Leases - Summary of F
Operating Leases - Summary of Future Non Cancellable Minimum Contractual Rent Payments (Detail) $ in Thousands | Jun. 30, 2017USD ($) |
Leases [Abstract] | |
Minimum lease payments, Total | $ 755,816 |
Minimum lease payments, 2017 | 48,206 |
Minimum lease payments, 2018 | 88,620 |
Minimum lease payments, 2019 | 84,550 |
Minimum lease payments, 2020 | 77,864 |
Minimum lease payments, 2021 | 68,385 |
Minimum lease payments, Thereafter | $ 388,191 |
Operating Leases - Additional I
Operating Leases - Additional Information (Detail) $ in Thousands | 6 Months Ended | |
Jun. 30, 2017USD ($)Tenants | Jun. 30, 2016USD ($) | |
Leases [Abstract] | ||
Number of consolidated operating properties | 100.00% | |
Rental income attributable to base rent | $ 48,400 | |
Number of tenants | Tenants | 24 | |
Straight-line rent adjustments | $ 500 | |
Amortization of above and below market leases | $ 4,218 | $ 3,409 |
Commitments and Contingencies -
Commitments and Contingencies - Additional Information (Detail) $ in Millions | 6 Months Ended |
Jun. 30, 2017USD ($)ft² | |
Corporate Office Leases [Member] | |
Commitments And Contingencies [Line Items] | |
Rent expense | $ | $ 0.2 |
DISTRICT OF COLUMBIA | Sublease [Member] | |
Commitments And Contingencies [Line Items] | |
Area of leased property | 5,682 |
Operating lease agreement expire date | Jun. 30, 2021 |
California [Member] | San Diego [Member] | |
Commitments And Contingencies [Line Items] | |
Area of leased property | 5,752 |
Operating lease agreement expire date | Apr. 30, 2022 |
Commitments and Contingencies47
Commitments and Contingencies - Summary of Future Minimum Rental Payments Under Company's Corporate Office Leases (Detail) $ in Thousands | Jun. 30, 2017USD ($) |
Schedule Of Future Minimum Rental Payments For Operating Leases [Line Items] | |
Minimum lease payments, Total | $ 755,816 |
Minimum lease payments, 2017 | 48,206 |
Minimum lease payments, 2018 | 88,620 |
Minimum lease payments, 2019 | 84,550 |
Minimum lease payments, 2020 | 77,864 |
Minimum lease payments, 2021 | 68,385 |
Minimum lease payments, Thereafter | 388,191 |
Corporate Office Leases [Member] | |
Schedule Of Future Minimum Rental Payments For Operating Leases [Line Items] | |
Minimum lease payments, Total | 2,079 |
Minimum lease payments, 2017 | 225 |
Minimum lease payments, 2018 | 462 |
Minimum lease payments, 2019 | 479 |
Minimum lease payments, 2020 | 496 |
Minimum lease payments, 2021 | 352 |
Minimum lease payments, Thereafter | $ 65 |
Concentrations Risk - Additiona
Concentrations Risk - Additional Information (Detail) | 6 Months Ended |
Jun. 30, 2017Property | |
Wholly Owned Properties [Member] | |
Concentration Risk [Line Items] | |
Number of properties | 45 |
California [Member] | |
Concentration Risk [Line Items] | |
Number of properties | 14 |
California [Member] | Properties Under Development [Member] | |
Concentration Risk [Line Items] | |
Number of properties | 1 |
Lease Income [Member] | Credit Concentration Risk [Member] | California [Member] | |
Concentration Risk [Line Items] | |
Percentage of concentrations risk | 35.90% |
Rentable Square Feet [Member] | Credit Concentration Risk [Member] | California [Member] | |
Concentration Risk [Line Items] | |
Percentage of concentrations risk | 27.10% |
U.S. Government [Member] | Lease Income [Member] | Credit Concentration Risk [Member] | |
Concentration Risk [Line Items] | |
Percentage of concentrations risk | 97.40% |
Non Governmental Tenants [Member] | Lease Income [Member] | Credit Concentration Risk [Member] | |
Concentration Risk [Line Items] | |
Percentage of concentrations risk | 2.60% |