DEA - Earnings call transcript Q3 2021 | Easterly Government Properties, Inc.

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Operator

Greetings. Welcome to the Easterly Government Properties Third Quarter 2021 Earnings Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] Please note that this conference is being recorded. the of to Investor turn Winterhalter, host, now President Vice Relations. will conference your over Lindsay I Please go ahead.

Lindsay Winterhalter

Good morning.

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

future publicly otherwise. operation the Although of with plans, statements, filed risk or limitation, or and believes the its XX-Q, described suggested assumes intentions, uncertainties the will be as XXXX, for factors filings, expectations Company risks U.S., SEC strategies and no any including condition achieved. reasonable, on differ the filed Company. today, economies its expectations, global of and update new in the without forward-looking including, result the which be those COVID-XX beyond give Company are or in later impact the actual of December whether be XX, from option its on impact statements regional are and strategies we its related other plans, XA, year of forward-looking to ended information, Item the annual XXXX, on prospects of that XX, Form a no financial intentions, or adverse in February events the and SEC expect and results adverse will forward-looking materially and may variety report by it to results by potential on XX-K The attained and Factors reflected these Form Risk affected those in that Furthermore, that as statements of contained can control, and a Company’s those will the assurance

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

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

Darrell Crate

by the and Good our and I’m the for the quarter not Lindsay. pleased Lindsay, Thank morning, us for third could addition conference progress business to you also joining Bill you, joined thank everyone, the I third Company’s Trimble, be quarter. with Company’s more Today, in COO. and CFO CEO; Baivier, during call. Meghan

our original $XXX diligence morning’s negotiation this million on target release, the one-year in our for terms, We develop saw including all represents of we acquisition the and as acquisitions all are for announcement, you able to to is guidance identification, exceeded acquisition volume XXXX. acquisitions have second increase goal XXXX. closing. told, increased a our XX% ago. this of And million. to With we this metric in pipeline, This during our increase stages from of $XXX And

$XXX are achieve acquisition positioned for very our target $XXX of we addition, well In million to range to XXXX. million

bullseye an announcement position with side expanded purchase side of with over and addressable In portfolio the competitive our joint addition, venture the our executable the medium improved materially or partner. we term outstanding market by

one auction. we that bidding building sizable Unequivocally, We the highly ago, cost we As scale was you competitive competitors. relative Why? the within to bullseye. speed may lost have a there our bidder, lost as should was were our given close, that our squarely were match to were of recall, to we given is And the while owned. and on our able years the not we our price building a capital we

funds a universe we next we there the where that could to as over It at can the began coming will would billion credit a find our clear pension economic most decades, companies, a government, purchasing effort. real the effort of Bill U.S. find Treasury generally of to for sovereign have by or an our that set ourselves investment we dollars wealth insurance global States needed at worth audience where see trade learned and global and estate as sites who night realized with they enduring United is they that also of exceed the funds. reach similar part We both are this are nature We full drama. leases an expansive their see of several ultimate was holdings disadvantage. well a could value years spoke estate values domestic the as What says, We issue. buildings real years, us folks was are assets XX that also with the that of solve development renewals responsible to life sleep that and the and facing backed several in who XX on investors estate, see of that the real securities, without over

transaction realize relative calls the we risk types. our whom came scope premia a offer our public believe and assets partner after risk can While we approach significant found global ago, and an these and of simultaneously we REIT States quarter of with mind. work portfolio a conversation that narrow instinct our these United is we we large of by result the this while measured the first the the the in sub-X% that value company for universe that us investors to REIT quarter we sizable discuss see shareholders both, at treasuries, those assets. two on was CAD, market, own cap shareholders enabled XXX-plus a is with to to decisively our interactions accretive assets deliver to harvest It’s creatively to several weeks investors. and The value note investors’ needs in our competitive being assets that to basis-point to for while in most transaction of important to leased valuation the marketplace not serving public rate. Ultimately, highest announced quality broader the organizations with asset our the public This we which global in premium the and FFO join of invested as

over illustrates is market at and for portfolio that While further the we relationship couple attractive of competitive us quality, the to advantage assets organization the solve a total our VA measured our existing our and can importantly we addition expanded assets transact purchase model this of I’ll by Bill this positions for brings largest call describe by enterprise. addressable universe. pristine scale their over the Board compliment the the this turn work quarter. as which more as the our and and activities I’m challenge, of With the our to new about last that, the within to it target capabilities efforts diversification, years in very duration, an to I whole excited to

Bill Trimble

of or potential system, portion and brand-new X to in its perfect an Easterly, its gives months quarter, from recent supply the our entirely of would to features square metrics generator from entry and of portfolio lease since during our square with U.S. full nearly with Service support National portfolio for shareholders bullseye assets. leased age strategic criminal through This a It invested To in investors. If of together. agencies of average noncore and for the age me XX% terrorist the feet. as clearly is it a again to its acquired U.S. of important operating Veterans improve located term and Easterly, our term. a exciting Midland, properties significant good partnership Company XXX% transaction square-foot specialized drop this all deliver And very substantially may A weighted office. XX in is acquisitions years; lease XXXX partners portfolio Security key world’s well. of to an build Class we most all of us time X.X the grow these the located and Ohio, and of leased backed scenario at October of portfolio’s disposition quarter portfolio weighted weighted to several call. Department and also Thanks, June add quarter-end, whose discuss improvements Company’s port, specifics equity Easterly XX,XXX materially while would a of fulfills great strategic the warehouse and XXXX, government, through flow in as X.X of is serves that metrics into an through in the Cleveland’s niche of battery who and government. average competitors last any a in leading simultaneously earlier Starting the as third of income Also, us investigating term acquired, growth venture for to assets with a XX to acquisition portfolio this mission-critical forecast third average productive continued leased market a of for debt a Weather organizations the third XXth a million and through assets single buildings VA entered fit extending seek the of Department to agreement joining ‘XX team the asset, both joint such from average been building, activities. our has remaining our within in discipline lease portfolio Affairs. Homeland XX.X is With and backup reducing grow our quarter, years; morning. a size lease the the acquisition parking, we It has X.X to for Georgia. million approximately X, where owning weighted power and square-foot its and which a Darrell, the years X expect you September include Subsequent earnings uninterrupted XXXX. U.S. date quarter state-of-the-art by this activities remaining this three Cleveland, commencement the faith to with XX.X the cash acquire lease property through the feet a was privately Easterly all one in credit the secured Level the average of for acquisition, government-leased Thank to can honed actual facility Through the profile pleasure the XX by networks. the sally Security, government XX% of XXXX would facility the million assume The us annualized we very missions were tenant largely is and Easterly’s JV, renovated years already X.X leased XX% A on differentiates

a lease definition, the While asset, quality owning for candidate facility United creditworthiness of States lacks the a government disposition is, Easterly. by a that

asset the And of or a communicated of Easterly of leased as City, the the Services nearly VA outpatient work acquired Company’s X to the Easterly to profile to potential and USCIS region rolling X States the portfolio quarter-end We this located now in that simultaneously primarily portfolio. lease the the while JV, XXX,XXX long facility, in is source put closings square-foot VA future by with strengthening United Missouri. the for Subsequent the XXXX, and in have able of addition to properties to capital Kansas acquisitions. a Citizenship Immigration funds metropolitan acquired facilities between and remaining

limited XXXX. total not XXXX. outpatient options States. not majority for clinic than of term expire exercised, The is the not weighted outpatient completed a of located The VA VA that more property clinic weighted of until certified XX residency the was permanent portfolio. Midwest facility leased U.S. for a the build-to-suit date and in expiration February this of of Easterly is the for the recently region the could provides for finally, through the the benefits, field ancillary state-of-the-art years does to primary range the the just has Center optometry, to summarize, the which X all mental rata in of USCIS health, files acquired be this clinic an average dermatology, property JV, XX XX million, leased Pro authorization from outpatient building adjudication immigration medical the late non-cancelable acquisitions, expiration as Benefits the National audiology, target the different of square Globes wide May Midwest XXXX. serves NBC’s United to, employment, services, Easterly the VA year. that With territory VA supports properties January for but every of lease lease Company tenant as naturalization. initial radiology XX,XXX through renewals including, Green average X.X price And an $XXX.X primary USCIS’ Should facility year-to-date, prepare is its acquisition date directly the be applications travel announced is processing XX the facility Easterly morning, for total case the JV, XX To volume or care, as function NBC, for for a in-place for Notably, lease prosthetics. or approximately acquired offices XXXX. acquisition, The Yesterday, state is to which purchase exceeding and totaling and our of or contractual either part square-foot these $XXX for increased owns million abroad, forma and directly eventual through properties including feet. million nationwide. XXXX, latest pro

pace conjunction XX% with $XXX our $XXX FFO XXXX As guidance and you to per our diluted year acquisition by our given in of recall, acquisitions a clarity from on increasing we our fully volume pipeline, basis million of million. increased share target for the the

of the call, identify million of portfolio by last Since time acquisition our more future pro us possibly pace. next increased to that are for of JV, will carry our or has We rata we for slowing The actionable the for in call, or to share time certainty our volume. letting to our the the deliver no work has last exceed volume was we ability year continues meet identified Easterly felt confident know that the And opportunities either single of couple spent significantly XXXX. will while team acquisition and large the acquisitions pipeline to also pipeline doubled of into and and directly $XXX opportunities, growth robust created shareholders. this in a team through years, you team than looking means the in hard our opportunities our

development. to Turning

the program the has reached we laboratory We actively new GSA together the determination ensure past several report to are FDA government the engage government spent working with from this to to pleased pleased project. the that a again have development months maximum Atlanta on for proceed are The requirements future and and with its once process. FDA benefit facility, and the redesign

non-speculative heavily us the government the nature specific is to our of customize the build-out. development needs, they collaboratively design Given After relies the the in functional on design, the work government its determines on we as process the and government dependent their projects, construct requirements. then

the was of Lenexa. the the During build-out, specialized have ability case construction line given FDA in field, as to time expertise we in the our accelerate demonstrated

cash Vista quarter, XXXX. applies XXXX flows. we term renewed XX-year November not until Turning duration of lease that management DEA renewals the leasing for the to to does retroactively that In a at of meaningful our the updates, to expire November secure team asset lengthen and continues of third

square average leased time of call. XXX,XXX In feet years lease renewed renewals, at Easterly over VA several busy totaling the various our GSA assets These XXX,XXX square XX annualized exercises, asset, re-leasing lease other XX also at years XXXX. the of lease approximately successful leases XX.X year-to-date for closing, Buffalo translate and IRS including income We the in since been a last combined foot X years. have XX,XXX we the weighted for foot square approximately into with for or of X% key term

assets. acquisition of bullseye the have scaled meaningfully Company’s and portfolio through We the accretively

We year company. course have acquisition for public on a highest charted record volume as the a

an even turn for to assets, the to We call this your partner, discuss have the With a U.S. owning by joint Meghan our executions. further have full backed new venture the time of investment financial refined and quarterly faith I’ll thank you over formed with capital and experienced I markets global credit government. and of morning. results we the that, primarily discipline

Meghan Baivier

quarter me great consistent another to issue our deliver Thank post you, earnings demonstrative Good of ability strong growth gives to pleasure for guidance to XXXX, It everyone. morning, Bill. and shareholders.

$XX.X quarter. a quarterly $X.XX. basis third as FFO on distribution per for results income the per to adjusted basis Turning diluted was FFO $X.XX. basis on a share million. fully fully cash Net And was per share our diluted share on fully diluted was for was $X.XX. a available our

approximately average approximately and weighted totaling term feet. X.X debt years matched, square out, XX As like operating project lease feet of maturity I’d additional the portfolio owned to years, weighted X.X real design, square XX.X to with in was commercial comprising of The age years. well weighted properties, remaining September seven XXX,XXX estate we nearly one of million the our average development of was point XXth, average

of As buildings long expected acquisition ability as lease demonstrated come. of to announced for to the end. assets acquisition quarter subsequent through VA the through Company’s years cash our actions core duration. strategy continue the renewal These Bill to pointed to to and generate reflected out, also with flow are to metrics young the these strong of for existing metrics are portfolio have These XX-property continue improving visibility

credit billion, quarter-end, capacity indebtedness to acquisitions total of $X for on the future expenses. Company the sheet. balance approximately with line development-related Turning had and At ample of our

XX.X% to was September EBITDA times. debt of enterprise low debt and value adjusted As its X.X forma annualized pro net to ratio was net total XXth, Easterly’s quarterly a

number quarter, of third events. notable Easterly a the had During markets capital

request facility, draw the up basis on its and which unsecured $XXX available a an revolver The The the commitments four be million loan and to to the total date The extend to facility a the without up for the under Borrowings will amended closing The delayed years July of of prepayable $XXX XXXX, of July in revolver five lender mature allows for of to option date from entire of $XXX the $XX initially credit a penalty XXX mature to term term million will spread million loan accordion will with amended facility. a that for leverage term July maturity XXXX. million credit XXX Company loan. plus days, additional in bear to the loan revolver XXX at the XXXX. existing years the revolver capacity from is basis LIBOR the up XXX XXX to The includes and LIBOR senior up restated to will consists First, credit basis feature rate a a of at a a Company plus post on interest term Company’s upsized bear $XXX will points million. closing. of points, rate of interest facility of closing to the spread depending ratio. loan term

and sustainability third-party independent demonstrates strong organization, commitment is by Easterly that citizenship. environmental Company’s term spread XXX leverage the Easterly to to the evaluation. improve for the XXX Given hiring X of points our ratio, by earns it and Of can set an the credit facility amended sustainability-linked for and basis current sustainability a at is pricing corporate discounted pricing Coupled basis-point, note, Sustainability, the with revolver whereby spread this our role features also meets performance a new component, certain initial our LIBOR as determined if bps targets of the loan. meaningfully within Director a expectation our

funding shareholders. X.X All pipeline the the to of provided ended forward $XX.XX shares underwritten The to second share Company into to the of unsettled the common weighted stock This approximately that as average Company’s has from a notable of the Company’s sales to subject pursuing transactions. stock of ATM in acquisition sold quarters. to accretive quarter issued levels $XX.XX XXXX, X.X the Company proceeds approximately at was third quarter prior approximately of which with In its Company strategic million Today, its of $XX per of net through raising are the program common executed has Company were XXth public forward needed at price net Easterly on September million net entered offering million. forward continue X.X transactions per the are price shares, a shares a for basis. offering event an million share, sales shares

physically Assuming net the settled a proceeds are full price forward at sales these in Company $XX.XX of average shares share, receive of expects million. weighted per approximately to initial $XXX

our at in amount of sold the maturity and to Together, weighted principal extremely forward with in notes years Series powerful attractive funding sales, is unsettled to continue cost and weighted of announced fixed of issued two $XX Raising a time the rate of and million Subsequent shareholders. senior the million upsized interest tranches, $XXX X.XX%. these previously Easterly the amount senior at The generating notes pipeline B A development an notes a maturity. were a average rate $XXX well for just tool notes. amount value with these long-term capital. unsecured and and very maturity With seven-year in issued poised million such is acquisition rate of Series is highly unsecured in and notes is attractive Easterly average X.X nine-year debt maturity an the average quarter-end, weighted

for has stake investor, for JV. JV management day-to-day believe, demonstrates will in the our relationship the and also of partner this million portfolio a responsible JV in This will new vehicle be partner, Easterly the underpin and with stake from receive as global the Easterly Easterly’s in leading strength the the stability credit quality. brand-new into cash asset properties. venture Easterly investment will retain management flows to fees square U.S. interest quarter-end, connection government that announced of which the the with partner Easterly’s retain will JV X.X we foot entered XX% XX% anticipated a a with Finally, serves a joint global and a subsequent VA portfolio.

forward a relationship come. partnership by many beneficial the strong, years excited look are for mutually to We and to

to Turning re-leasing.

upcoming lease continue to previously Bill expirations. progress our mentioned, pipeline we in As make working of through

up of various five more continue feet in renewal meaningful we GSA XXX,XXX properties now renewal square the through Vista successful sizable GSA percentage of With XXXX. DEA large time. leases all Buffalo, within make for have end the a With leases regarding with work two now behind us, and and discussions this to execution of progress the active the approximately we at the and are at

and about We keep and continue to the renewals feel long-term the you of future we’ll in expirations, coming of good apprised tenancy mission upcoming these quarters.

to our Turning earnings guidance.

guidance, development-related XXXX position XXXX. acquisitions Company to year-over-year. fully completing our track $XXX are in our our Today, recall, to you in gross deliver record is increased fully its in remain sentiment, and guidance of to be a increased range part remains X% quarter-end in our year-over-year for in to quarter This contractual million At Easterly midpoint the the based the a with its since of As during to to a increased up stock actionable $X.XX. guidance FFO acquisition a to investment recently a $XX to up source steady share FFO yield upon per $XXX at guidance JV pipeline, a $X.XX generates the through XXXX When dividend the a the XXth, goal share basis years. on and price Company’s our XXXX returns steady rate to we continue midpoint Bill per upon of for $X.XXX diluted a ended continue of we pro over Reflective this of June share rata of our proud are our also remains our range that acquisitions, track development-related share per total of on this dependable Easterly its which an in increase acquisitions deliver constant coupled million issuing To in is purchase dividend last investment of growth $XXX per attractive expected X.X% from excited we’re Darrell’s diluted Company completing our an our on last the to shareholders. rate, as The earnings Company to and XXXX. run echo guidance to stated events midpoint, in to of increased predicated is FFO million gross million on to the and in maintaining have share the by the growth was previously guidance million enhanced call. $XXX growth predicated achieve $X.XX three and million in in at FFO share, $XX $X.XX. shareholders. basis provide acquisitions, per FFO including on of transpired CAGR

attractive to We our equity acquisition at raised levels forecasted have match record-breaking volume.

We have at sheet rates with fortified with balance issued maturities. attractive long-dated the debt

the of global have joint investment back We relationship formed commitment future appreciate will I for partnership. in charted Company’s now for we’ve the your your with thank first-ever a a and XXXX growth venture, a we course and lasting our guidance. preferred that, you investor through introduction turn thesis our earnings With to the call to Maria.

Operator

Emmanuel from Instructions] Korchman first comes Citi. question Our [Operator with

Emmanuel Korchman

morning, everyone. Good Hey.

is Could you targeted new know versus acquisitions of of or the what under for of quantify about how thinking least that JV about? XXXX. sort contractual, much planned at acquisition Just the we already guidance outside

Meghan Baivier

Sure.

we work into we next guidance, volume on as to continue portfolio, obviously, acquisition So, falls of assuming million $XX are VA closing rata placing that pro year. the

Emmanuel Korchman

then million? $XXX of $XX $XXX million million to the at the $XXX and $XXX of acquisitions million million JV So, fresh

Meghan Baivier

Yes.

Emmanuel Korchman

does I when only the the was So, the of was XXXX. JV you much, rest there for slated that that Because one and deal close? under was haven’t impression closed

of terms volume? in missing I am what So,

Meghan Baivier

Remember, in that are but of was Look, is as is whether this CAD. accretive a those tail primary is to as that really really venture joint fall know levels driver -- at FFO. is And our growth. year end will or $XXX that they about drivers of we slide joint that at FFO addition deals into target our the the the But, next messaging they to be is that venture. VA messaging million that without accretive FFO, portfolio year, done the important messaging to of the

Emmanuel Korchman

versus in talked the us more that you’re are Bill, the in more asset flavor on large statement of to pipeline? versus your into mix quoted now release, give Just were about looking single identified categorize you then, deals identified And we in that same? portfolios sort right. the If at the is or some press portfolios, All there past, a pipeline.

Bill Trimble

say, the at out but calls, that some we previous as looking confidence I’d that, properties -- us next at I Yes. interesting twos, that there, that we’re as pipeline. mentioned Manny gave that portfolios the ones always, for issue really we to ones and -- think strong are is in we never the looking bullseye year’s it’s certain. But, the that timing guidance the

top of portfolios the would that that think, I be on probably So, out. if worked

Operator

Markets. Carroll Capital with is Our RBC Michael next question from

Michael Carroll

want question Yes. go it roughly closed still close? have you real much needs of the to still million to $XXX Is quick. back portfolio? share your joint to just be that over to How that within I do just Manny’s venture of

Meghan Baivier

That’s correct, Mike.

Michael Carroll

help us sounds majority when understand it going close of a you It in that is to XXXX. like will can And close?

Meghan Baivier

Yes.

expect right, end price, the total purchase quarter a So, is said, what by we’ve year. we right, of to on but of to fall all -- second $XXX the million final next the

year year timing the going we’re you in or is do caught properties of close at million, I perfect don’t to think, these they are when in end a of point we in they as this will the close. whether $XXX get target of beginning is to that of up next addition are to development to encourage the The that. able

Michael Carroll

JV to addition the In closing?

Meghan Baivier

Correct.

Bill Trimble

Yes.

Michael Carroll

Okay, great.

Meghan Baivier

$XX million there. underlying is assumption the

Bill Trimble

Yes.

of we’ve last we’ve FFO, we’re and a -- that’s year in can’t I X%, demonstrated X% a we that it Meghan yield think, say our dividend as business mean, three as a X% steady growing enough years. got I delivering the between business over said,

which are buy I are and next full in our what’s a and a out our activities, can’t to global think enough be overall partner $XXX rate Our market. business large, these pace to in continue a And build of advantage pristine these CAD us think others really proposition. is to a one-off flows million It’s very steady-state it’s investors dominate as over many in in cash assets these is base joint turn-the-crank cap enabled of markets And is business. see way lease say acquisitions steady space, at that and to that a the our broad government of most us can I that U.S. is the portfolios competitive And do just continue attractive the that we who in these today. belief very investment sort assets that this that core of assets a most the the million as credit growing decade, to It’s of attractive of venture $XXX which to so and important owning at faith across in public is granted that contrast stark to sort the that. important FFO. go And enterprise to we’re set enables in it year. accretive that excess value-creating realize cap, I relative to sub-X% government these this marginally very to portfolios

Michael Carroll

assume you you then, plan that larger... joint do on the down to the I that portfolios want mean, assuming And how I’m right? other do we that would growing should the there’s JV. in

Bill Trimble

dollars. of -- Billions billions

Michael Carroll

deals venture portfolio and be smaller larger these that joint assume will then we could transactions completed balance should on the be one-off sheet? put So, in

Bill Trimble

It’s will days. it’s we these joint there it’s We large where to are portfolios appropriately. think they’re that go the Well, we’ll not partner, venture no, venture really that And early fantastic. this and simple. joint use

I a understanding their can think, And we think what deliver. astute estate I real investors. very are we they and of clear have objectives

be growth, going steady-state of X% growth with X% to $XXX delivering again, million then, be is to business we yield work joint year. X% shareholder shareholder on -- public to So, top also demands these million return have public for is that as excited our a come it. that acquisitions allowing more large us meet that Having our to that venture transaction us And partner to helps of deals while on dividend $XXX craft capital, our a with very REIT couldn’t us the grow forward, FFO dividends. to

Michael Carroll

for came that of it? just mean, bit It transaction then, you as is this sale, one you someone guess, And marketing And one sell end. sales? other I an plan a can leased I you your to was -- one or talk they are Okay. buy completed, said to was out and wanted post just opportunistic little you you the to do -- the properties? asset those there complete? about privately I had quarter is type kind know a small

Bill Trimble

Great Yes. question.

execute core right And sale that going would always was source value that it. other and saw if these moment I time it we’ll are In The think, public shareholders, an nongovernment a Those did. transact we’ve a if would we terrific, for sale. we accretive you met said to and it operates probably at any opportunities it. good for were the case, And viewed do be can went absolutely. forward. as basically since for always on assets we this available properties we be we’re first and funds just property at sale answer we for our looking, the pricing of is new

Michael Carroll

then, sharing looks months. much super with And that’s like the want asset Like, within that but stress lease small I expires so mean because don’t I it’s put what’s specific the are we there’s next hope? one too there, six Okay. plan small, it in to asset? the

Meghan Baivier

mean, asking lease, Yes. lease Charleston an but time get the that of small private -- could our minimis, I asset. worth lease Mike, a not But, on it’s a certainly even net not sector we in call, earnings but our yes, you’re renewed. about de

Operator

with Our BMO next Markets. is Kim question from Capital John

John Kim

‘XX of remarks, the what you. about ‘XX on those Thank of was prepared all those some renewals? Were leasing or talked the side. you that leasing on renewals your were you about a And talk Bill, number you’ve can done spread then, in expirations? those

Bill Trimble

her. right Thank good you, got morning. She’s over in Meghan. and it that front of I’ll to hand

Meghan Baivier

Yes. Sure.

the call in the as Buffalo, XXXX renewed IRS been had well as then in in VA was two we as Vista one the other -- well quarter what were in obviously, one were and lease and XXXX. holdover in other two, lease DEA the the So, and

three are John, said, always And we we’ve as got years. renewals impacting those leases. just that different So,

we have that insight have tenant into. Some improvements

developing Some our are insights.

continue forward year, look we and quarter last next to to started talk as about annually renewals going we’re call. So, our to doing on that

John Kim

the spread? was What leasing

Meghan Baivier

Yes.

spreads the So, John, portfolio leasing annual basis. about talk within an on we

going that out we’re we record come next to So, as track continue quarter.

John Kim

Okay.

going at renew to the just year? year, end during the happened So, just the what you’re of

Meghan Baivier

Exactly.

John Kim

operating rate growth. know quarter, impact on was I run Is report going it looking that same-store which expenses? higher some a just expenses but good this sequentially, you was on up can the forward And, than NOI, items? revenue of at you X% the don’t inflationary those on comment

Meghan Baivier

Yes.

perform then GSA item So, everyone that the the term expenses, the the project amount obviously the to we we reimburses line government There’s our of and property us. equal the during an I the finance our reimbursement for offsetting that relates projects revenue to encourage tenant have -- a that operating we in will lease. in remember as

expenses you So, OpEx. to out property, thinking reimbursement when about peel truly to tenant amount operating the need you’re from the operate

you look, And so, we’re do very you John, to consistent think, And would see if year-over-year. were that, NOI margin of. I obviously is aware CPI something year-to-date

the We benefit nearing leases, year. in basis to this X% grow with of also have our our OpEx which CPI, will X%

feel so, insulated. we well And

John Kim

typically There’s reimbursements a the OpEx? lag and between

Meghan Baivier

drop. annual an It’s No.

John Kim

JV down? are is XXXX? rates as on me. of question What of a are sheet. balance rates And expecting think, cap you far versus But mix Okay. I do final you to trend generally, it continue the expecting you part what for cap just to for as

Bill Trimble

Yes.

with of X the And looking north sort seen X we’ve lots our of anywhere of of X, seen of at this $XXX which up sort a JV, outside a of to ranging we’ve million a tale for I it’s year. think, we’re cap. opportunities I we’ll two for think when what cities, be consistent

also market you we that in time, the very job same year, and look opportunities. so, little with this those And think opportunity those long-term Weather that robust, and that are X.XX I our are they’ve National think go to facilities. have bullseyes we’ll Service earlier of continues properties, pristine we there’s at year. and of headquarters year, we great if trading at for I acquisitions. brand bit buildings, lower. to sorts been pointing properties part, portfolio new to talked of mining purchased now leases sorts this be do enhance And in some come this But, what a X.XX, XX-year that the those XX, but cases, Darrell Yes, of in and they’ve purchased most about another set the And ahead a also the at this,

other wonders driver the our value; one, of and think and but tale as real overall one of, wonders two our doing doing of metrics I for for the cities, CAD, So, the of barely for accretive, FFO sort mentioned, wonders our enterprise growth and

Operator

with Korchman is Citi. Our with Manny next question

Emmanuel Korchman

confused to the going by I come I’m acquisitions, to Hey. one I’m know only back this. because not

JV left assets. have the $XXX you million So, with close to

for another, guidance to it, close. of million Your acquisitions call $XX $XX year this includes million to

year next close. to includes guidance Your $XX million

JV might something of model we did close? Is early to when completely and when that of ‘XX the $XXX million missing just -- $XXX in million it So, here? am conservative, our should I end or include ‘XX the piece being close by to because you’re

Meghan Baivier

Yes.

people assets missing obviously FFO we’re where right, year, can not go to venture. trying doing joint is like the which takeaway, so last in So, about the real will other versus the appropriate next level than an point, to guide something we’re drivers you’re to think where build

know. purchase So, $XX that the million or there’s this Obviously, a would that’s amount, something that year. you other when the to is from something in all next Whether got to model we’re you warrant December an whether to need different is year in into falls Timing some be if know would or perfect, do what sneaks volume total continue assumption you we’ll it in we rata case. perspective this base prices next out year. But going to I year the telegraph next think of development we is remainder into that acquisition year close never pro January, earnings and properties. but let as you’ve

Darrell Crate

earnings assets which going from to just -- assets perspective, these of maybe it an the driving what’s is consistent is earnings guidance. are say our an to mean, again, with the but for close I accretion

next as year done has -- we’re what it this XXXX, be there uncertain on these So, development FFO. projects a will marginal effect year,

news there these I hope will and CAD that a that close. be as that’s get helpful. I things think However, be do we effect, will the

Emmanuel Korchman

that to and just in you’re at same fee would to terms the assets on what deal then, of buying were if management that that itself? you. et set the cetera? same another or the would of do the that Thank fee, JV with this Darrell. And to structure, partner, be renegotiated It So, -- is, or contractual is would be you based

Darrell Crate

and I mean, we this I did happy. is all the deal think, intent parties are

I it’s a the blueprint So, we where in go future. think for

Operator

Point. with Compass [Operator Instructions] Our Merrill Ross from next question is

Merrill Ross

in Hi. about the question the or Tech that Kansas the two-thirds it leases, XX% Summit morning. GSA Good A Center. is look property. From government on of the Property City that lease seems

piggyback those remaining in if what on essentially? is are the the synergies And Do tenants, So, the… rating some what characteristics Or of on leases? that interested they be private shadow companies with the have any? lease assume the I’d I there are GSA

Bill Trimble

-- down Good or morning, hospitals the care asking. think way they’re mostly pigging they for necessarily health tenants Merrill. on local are line. you expiries I not Those the are but back organizations, Thank and GSA, wonderful with the [ph]

one the of is the things you in government building. the get the tenants an with is think So, Obviously, very private portion, with private pleased for terrific. absolutely tenants. great building I overall mission federal the bumps we’re and amazing And

thing we’re about A rare for that. us. So, excited

Operator

is Our Michael next Capital Markets. RBC from question Carroll with

Michael Carroll

accretive first, did to Thanks. than is be is about why that? CAD more in guess, mean, how Does And that that? you’re FFO? Yes. -- I does about rents the I is JV think come guess, to we Darrell, the or than I I rents, hear transaction cash talking GAAP to this, correctly? later the that going should it

Meghan Baivier

requirements, No. with assets CapEx That’s all CapEx minimis de minimis young about de requirements.

on that our to overall CAD can is accretion So, item, you less -- accretive yield. can experience FFO CAD average you yield while while it’s line the

Michael Carroll

Okay.

anything CapEx to else? the of to relates it side than related more it’s So, things

Meghan Baivier

Yes.

Darrell Crate

Yes.

Operator

remarks. I closing over appears call to there It questions. Crate now Darrell the would are no like that for further turn to back

Darrell Crate

Easterly to so Thanks year XXXX to quarter appreciate much. And third returns shareholders hard Properties Government Thank strong our for the joining we’ll in for continue call. the come. you, We deliver your risk-adjusted time. work conference everyone, to

Operator

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

Easterly Government Properties (DEA) 2 Nov 212021 Q3 Earnings call transcript