DEA - Earnings call transcript Q3 2017 | Easterly Government Properties, Inc.

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Operator

Greetings, and welcome to Easterly Government Properties’ Third Quarter 2017 Earnings Conference Call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Lindsay Winterhalter, Vice President, Investor Relations. you. Thank Ms. now may begin. you Winterhalter,

Lindsay Winterhalter

morning. Good

include Before with the considered the forward-looking made forward-looking. the not may of The purpose be company making please by begins, Safe Reform for on facts of the are call Statements note statements call. company use those and Harbor is forward-looking conference of Securities are these call on and statements statements which statements intends to this historical Safe Private Act forward-looking contained statement Litigation the for the complying covered by provisions. provisions in the Harbor this XXXX,

assurance the as these or expectations will its reflected statements Although, forward-looking materially plans, plans, be prospects suggested strategies achieved. be Furthermore, forward-looking of the attained or differ strategies that and no risks by by may those and will it that the actual affected limitation, filings. are XXXX, no Factors, any including events on that believes the to filed X, and in SEC information, ended in variety factors from otherwise. reasonable, on results statements intentions, intentions, other Report company are or expectations, its give statements a December forward-looking contained without assumes as XX-K year future Form or with those control, its of Annual whether Risk XX, new of March XA, The XXXX publicly Item company result and SEC can beyond company’s obligations for update a

may and available measures, as operations such the Additionally, cash on financial this distribution. funds conference refer to non-GAAP company certain call for from

would GAAP and the the Government like over relations supplemental Properties. to Crate, the to tabular to call financial a information package company's Darrell I site earnings of turn of now reconciliation release non-GAAP find separate measures You Chairman the the page web ir.easterlyreit.com. current Easterly most comparable in these conference at numbers company's on investor can of

Darrell Crate

Meghan Chief the for joining by third strategic Easterly Chief results. in Executive to and consistent the call. and to third Through two on Good I’m Officer; Chief and XXXX, and deliver Today, of thank financial morning, our Baivier, us Thank strong Financial Officer you execute addition everyone you, continues to Trimble, goals. our quarter Lindsay. Management Officer. joined Operating continues for Lindsay, conference Bill quarter

to first, Class to of A growth long-term achieve through re-leasing, federal consistent leased States The acquisition properties to FFO critical X% development of United mission government. the and X%

like two of the has building. materially or by FBI I generated a important Linda. the with value XX.X%, but larger, have investors buildings - full entry the government. increase return servicing team thereby Loma high stature - The to to and States edge marked and business by of commerce. in enterprise assets identifying, in and matters of the for materially our of returned by developing under-writing facing X.X% when federal we hone and Easterly quality backed scaled choice broader in Since XXXX, shareholders it's public-private second, common of and float leasing market. REIT exit the of stock. particularly our and the deepening community. leased to to portfolio in of assets definable September excess company a Reputation cost is XX% the scale be area order to The credit the well growing relationship critical in Lake the accretive United we strive simultaneously reduce acquiring, We purchase that by partner to with XX, in mission VA total leased flagship proud government's agencies. for XXXX brand managing and of note Salt the City government the continues am been And

future any Easterly. shareholder thank turn earnings thank by our for of work XXXX REIT. color possible We government, work team credit on a the you of our goal of to United in partnership and This are to that our for over over With interest like for year of great achieved revenue initiatives increases. hard we With rate also credit We volatility call to to FFO tenant XXXX. the facing that, XX% has to would grateful the value provide generating their backed shareholders return. quality I highest materially their complete been related reducing start Easterly and Bill drives full as our will in the delivering States while our growth have the

Bill Trimble

and begin quarter third Darrell, the company's I to achievements good would like of XXXX. the highlighting by Thanks, morning. in

least facility, important This and Salt on in FBI making Lake owner the announced of agencies A Montana. throughout overseas The City, offices tenant of Gold located of and October field XXXX Salt a of strategically private throughout on acre offices, completed facility quarter the located 'XX government directing Upon was the in government now square Idaho certified, Class federal FBI The the is operations field also foot four-storey, in Utah, office all headquarters this closed the in term resident campus is United XX regional a Utah. and country. years. Easterly serves single construction we as seven and the XX, Utah thus and is located XX Easterly offices largest occupied States through XXX% properties and single, built-to-suit FBI known LEED states. for initial XXX,XXX of XX as located two field Lake by FBI field surrounding XX X.X satellite City closing one non-cancelable FBI FBI of owns occupied offices

is is to just Easterly seeing outpatient on mentioned The a we located basis. VA also veterans prior outpatient acquire under a As that facility local Indiana. is now contract is South and outside Bend, calls, complete daily on facility

growing portfolio. close to our on into expect welcoming coming the quarters this look critical We in mission and important property facility to highly this forward

state complete, combined similar acquisition square feet. is will outpatient backed XX,XXX credit of facility own smaller art the outpatient for an to reminder but VA Easterly non-cancelable square term. the South Once The VA is XX-year to outpatient very the on full Bend A a Loma VA leased As scale VA of clinic totaling initial by of Linda Class is Bend well the U.S. XXX,XXX space two government. the new leased South feet facing a of facilities the VA

While on art of first Class are and Easterly's the going nearly the square is under pleased Loma A XXX,XXX its has we the to operations facility. had outpatient report care topic ownership the the quarter of center of VA, state Linda full everything in well foot

a the over from funded this tenant our enhancements to new VA In requests facility. fact, at number recently valued asset management make million, received to $X.X of brand team almost

our is asset XX portfolio. tenants team at Our they management are the managing needs and addressing wonderful of value job of quarter across active enhancing tenant end doing funded the a projects

liabilities. duration, add the longer-valuable Mike both to his in provide but not opportunities serve in real they meaningful be Development opportunistic made next managing leases opportunities several we of for our and building pipeline Ibe and us earnings we government development. have that only expect accretive in will as stability are to years. strides team XX value the also to additional Turning years opportunities and development being can shareholders, many us which their well give the

As to both FDA. the may be occupied development by we you recall, underway have active projects two

square California. XX,XXX laboratory first is Alameda, foot a located The in

completed we demolition [self] to in permits report the site We that are TI first hand. permits of pleased now and initial have [ph] have current and the the stage all

of to design with changes We the is this and FDA make to agency. sure tenant incorporate completion hand are project working best some estimated quarter GSA of facility use date to the functions and first The the hand XXXX. that the in of highest

laboratory. roughly square finalizing in Kansas the We feet and two City, will facilities, two Lenexa, third outside completion commence. Upon these brand quarter non-cancellable of intention anticipate is XXXX The an laboratory design XX,XXX XX-year currently we just second for new located completion leases early drawings. of Kansas, are this

mirror Our sourcing drive quality acquisition that building and high average size constantly portfolio growth. FFO is our team opportunities new,

development to then are XX,XXX right eye of evaluate the million of tenant of achieve to in to range design million in look They a rates over re-leasing their building tenant, fulfilling If the within requirements, leased a to potential and bulls have important constant result at sell meets increase in acquisition usually that feet We mission they we properties looking with remain opportunities to occupied and a square is real perspective as contact pipeline that project. robust size. These low the reiterate, a To an $XX underwriting buildings to target this developers from estate acquisition. by single the right includes the traditional on XXs. eye the elements nature U.S. often are will a and are fall award government. market so move $XX build federal a of we renewal can high-teens very our bulls

tenant summarize average activities the and Finally, of development our the like development we in the the We company. lease and term remaining of to state this and time feet assets, two exiting welcome new and art acquired acquisition growth despite be agencies quarter for XXX,XXX projects of We Kansas, third active extended we six, relationship the the agencies the were VA development FBI. to portfolio of marking for our tenant XXXX, the our us. U.S. reduced laboratory working since adding the to soon we five the new portfolio. two with brand awarded have new grown and Courts square age to portfolio, the FDA Lenexa, have progression OSHA our Through rights against have

earnings am to the year. turn we I I all CEO, over With discussion for a Meghan and quite quarterly that, the proud the of in will results have of company's the As now accomplished past guidance. call

Meghan Baivier

XXXX guidance. Thank discuss on quarter I and sheet our XXXX Bill. an third current our provide Today you, review touch portfolio, and results, our our update upon balance will

Additional quarter in quarter earnings details information release the be regarding third our supplemental and found company's results package. can third

owned of XX for portfolio average operating lease and our remained estate. our portfolio we was was As XX, of September at average XXX%. properties age years, square term X.X occupancy weighted feet comprising million years, the portfolio commercial remaining real XX The X.X of our approximately

XX% facing United States addition, backed lease was by In of annualized income full our of credit over Government. the the

adjusted basis been diluted per income as was share in information measures and basis fully provided FFO diluted net GAAP GAAP on $X.XX reconciliations per quarter, have and $X.XX. a third a on the share to diluted basis $X.XX. share For supplemental fully our a on was measures FFO package. fully was per

line sheet. unsecured of on on million term senior credit our total on $XXX.X of loan unsecured balance comprised line credit, company outstanding debt. the to $XX.X Turning Availability was $XXX.X $XXX mortgage quarter million at secured outstanding had our notes, million, million million of million. end stood our and $XXX of which At the indebtedness revolving facility, unsecured of $XXX.X on

As on from a pro of it's physically sales common March quarterly quarter the total forward the issuing announcement stock XX, South on into in forward and of shares enterprise for XXXX, X.X in XXXX. debt Easterly's the of XX, exchange a on agreements X.XXX gross sales company's by XX.X% forma value XXXX September offering EBITDA the full the FBI company closing acquisitions. September to acquired XX, of entered ratio and Bend underwritten for operations was VA annualized net entered Linda XX, conjunction with On debt equity times, forward million basis and of Lake VA company XXXX, into million in Loma September the proceeds. agreements $XX.X were settled the Salt City which The an approximately net equity was

of and company of strength the to its quality underlying fixed senior execution private the VA As private both call, outpatient and government. $XXX.X notes care its meaningfully the company senior the on the market placement the maturity on tenant, average facility. debt. credit superiority placement of floating Loma mortgage notes two the and financing Linda ratio recently company's million million the Linda company's high $XXX The Loma versus liabilities of shifted U.S. capital quarter mortgage on of unsecured the earnings the noted and activities rate extended VA believes portfolio speaks second its These completed the of the

Turning to the company's guidance.

its share months on For in third narrowing FFO including Sandy the OSHA in acquisitions is Linda XX introducing the $XXX basis. This million development fourth FFO the December quarter forward-looking between date quarter, first and fully the of is guidance of share related XXXX on XX, the basis company in $X.XX. well FBI its acquisitions in guidance $X.XX The diluted in as The range Loma million per XXXX This assumes completed fully XXXX, $X.XX market guidance closing XXXX. $X.XX ending management's investment million and of South acquisition $XXX acquisition completed $XXX company million a during the the for to the guidance to acquisition anticipated of XXXX VA guidance an XXXX. announced second Lake of the XXXX a of with also the XXXX Bend per quarter, current VA $XX and FFO Salt in conditions. reflects City is assumes as of view and future acquisition company's of and completed diluted quarter, the

continue $X.XX other As to previously board December quarter XXXX consistent on targeting of will dividend of with IPO X, to share. our third the quarter This growth. related to pattern announced growth declared by we operations every record dividend with shareholders week, dividend a per last commensurate dividend be directors of future of and XXXX. our a December the This dividend expect penny our paid of earnings since XX, growing increase on in is

conservative Finally, allow duration last of we while back have look over for maintaining to before Since at our of our the this liabilities turning and the sheet. X%, quarter year. to since the and by third grown the have me operator come time a extending call FFO far questions, XXXX, we step how balance

debt been maturity XX% average by of remaining average years. our lead-term X.X to extended years Our over beyond X.X has

capital debt company Additionally, unsecured through portfolio, equity is on to raised the in turn the rate. VA one to in our thus the the our providers we growing operator debt, placement of Loma stock was the for of XX% private mortgage capital year announcement our our for the floating a and partnership. active questions. to out I both ago have been ATM Bend, ongoing term increasing of and strength South been with market our today for connection active like We call with would program. and and VA back and Linda. the we Using Loma the we now year fixed great structure It's Linda VA secured offering their liquidity and think XX% markets commenced accretively will the

Operator

from first go The Instructions] question Please Korchman Citigroup. Manny ahead. [Operator comes with

Emmanuel Korchman

of terms talk you. you ago. about one this there sort are yield of first versus yields over or for any maybe you a loosening couple of the Bill, trends you or is Can where came months quarters? in Has what last been years seeing tightening out of

Bill Trimble

Good morning, Manny.

change. bulls not happen and seen We last it several the in purchasing we much purchasing we some are been point have for properties that rates really way expect would of We that the at years. those at the but would eye same lagged has definitely have basically

Emmanuel Korchman

thoughts have And got longer One, just term on for Meghan, couple your you. leverage targets. a I

or two is there assumed next two times is the six the million comfortable now, over project to And guidance, you to projects that million $XX that. new year's that or are you for development something $XXX of spending, You is are a mentioned just with. have related that in

Meghan Baivier

Sure.

with six basis. first to on We target. that regard then on on triangulating $XXX remain times million, that to the that Not leverage FDA your to to Manny. $XX level and XX% on Alameda our correct, comfort million an consistent the FDA moving relates XX% development the Lenexa. with to operating point, seven So guidance, And

Operator

with is Auturn] [ph] Please ahead. question from go next The RBC Capital [Brian Markets.

Unidentified Analyst

general? are in mean any I GSA picking seeing up activity there? market Can talk about the you built-to-suit if you

Bill Trimble

been projects those we public government. some are interested in that are go down this to won been that projects that since of we obviously federal that are mandate obviously fit beginning point. the actually picking massively, up few bulls construction would beginning amount while will our to a say we Obviously, every with I which XXXX eye. keenly a the but see having have forever can't guarantee within think addressing XXXX single I some and obviously for timeframe, in we new up would during FDA we it beginning at have business and to the in on we of for see that other percolate huge saw needs laboratories and this slowed to

Unidentified Analyst

more. the pushed South Okay. And then that XQ? Andy one Bend reason was in back acquisition, The VA

Bill Trimble

South the ago, guess. was spectacular three for really. weeks day out four Not about opening I in I there Bend a was or Indiana which

items as absolutely through some an it's getting up, as cleaned Just gorgeous are punch and soon lists those facility.

We to will take XX and ownership forward look VA years serving for to come. the

Operator

ahead. [Operator next Lewis Please Humphrey. Michael go Instructions] Robinson SunTrust Our question comes from with

Michael Lewis

that expected change that under project? impression back I and true that, like was don’t the I that to more Alameda, a there any On that of the moved yield has know mid-XX why, Is been been has completion. would on that

Meghan Baivier

Hey, Alameda XXXX. is Michael, targeted for early now good morning.

we yield that’s the making to ongoing GSA basis to and its have in facility FDA. the this consistent even said acquiring. XX As where And with XX the earlier, still for is that on premium tenant, were we functional more and to point

Michael Lewis

in then you that’s equity And assume the what terms consistent it sort 'XX. mix Is for have a funding Thanks. debt at? to of Okay. safe and of running sources of been with

Meghan Baivier

Yes. would leverage six in seven to targets our times. tie I to back that

Michael Lewis

And me, see and potential Okay. I just ask then XXXX percentage in your assume the renewal your know this there but finally any quarter, that you from are XXX%. line assume move-outs guidance could I is every down I I

Bill Trimble

very -- XX%. on and three obviously I think the we successfully. we properties DEA The at that’s correct which with and renewed two we before, and now are right dealing have warehouse continue to negotiating government discussed

are just correct. [indiscernible] facility you it's but So

Operator

Please ahead. with next Our Petersen question comes Jon from go Jefferies.

Jon Petersen

maybe for any you any challenges upcoming or I your question, might guys. you changes expectations with behavior and present buyer any for seeing that tax or curious in reform, opportunities one and if changes, are am market Just in seller

Bill Trimble

Yes.

have to seem and market. necessarily prior bought have but said of properties calls, in doesn’t off more sense interest which make of we think I to this actually as much I our most us,

reached we we with fact believe very are they million a interest actually these going that modest and $XXX see million $XXX rates, an that more as an that we way strong would That to pipeline. in see going in our we owners as see increase sense point active forward And part even, uptick In lot have property. in of maybe feel to than a going that their we opportunities to overall make a the have half. the are

have you anything on Meghan, So to tax. the say

Meghan Baivier

helpful I public think currency XX-XX of is our exchange to [REIT] beneficial [ph] is useful attention and also as their sellers. certainly

Operator

no are this like time. would to Darrell to Crate floor comments. at There further for closing over I questions back turn the

Darrell Crate

strong Great. Thank high interest full third your you, an States very forward to quarter to we leases the of call. backed everyone the Easterly in quality Properties and and by the credit of to facing appreciate to deliver conference for your build support shareholders. compounding portfolio joining We a returns Government effort look government continuing United

Operator

you. Thank lines may your today's time. participation. This disconnect at Thank concludes you and your for conference this you

Easterly Government Properties (DEA) 7 Nov 172017 Q3 Earnings call transcript