DEA - Earnings call transcript Q1 2024 | Easterly Government Properties, Inc.

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Greetings. Welcome to the Easterly Government Properties First Quarter 2024 Earnings Conference Call. [Operator Instructions] Please be advised today's conference is being recorded. I would now like to hand the conference over to your speaker today, Lindsay Winterhalter, Head of Investor Relations. Please go ahead.

Lindsay Winterhalter

morning. Good

statements begins, may certain not Reform include and considered call this made historical Act note of are call meaning conference statements forward-looking of please XXXX. the Securities statements that during facts the Before Private the Litigation within that are

Although believes achieved. expectations these will expectations attained or that as forward-looking in any that the are no reasonable, assurance company statements it its reflected can give be

will control, update in Furthermore, affected actual that materially The differ variety Form forward-looking with SEC assumes risks by in be results limitation, obligation XX-K and of from those any a filings. the recent company no contained and the are statements publicly described statements. company's beyond including, may and forward-looking its those in most SEC to filed the factors the without company's other

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

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

Darrell Crate

thank to and everyone you Lindsay, Thanks, for joining us.

I've to but work call. I'll keep all this opportunities, Q&A, through it you take X pleased are we I'd away we this our from with can so as We to important like get quarter progress brief messages got

and Megan Allison drivers we're a about shortly. path towards it. will First, the earnings and you material for there's we shareholders, numerous growth believe talk to on

that there path our the also gap. payout high, a close that ratio we growth we is is helps we dividend materially pursue know Second, of but can believe

And own U.S. under the billion modest nearly also the that assumptions, XX% we'd We [indiscernible] the actively believe XX up billion are we government government. collecting managing sit should from we rent rent with U.S. and that currently leases $X portfolio be coming if in are renew credit with we today. expenses. for reassessing our which Further, just from $X years, We

Difficulty] [Technical

as flows we the we dividends, higher of our very comfortable And duration creditworthiness given the shareholders. and periods cash backing can the to of ratio. remain payout our with

we for Third, a the unique broader mission-critical essential real owning agencies. designing occupy infrastructure place government's industry, the U.S. in and estate

cartel responsible every For million ongoing our Sinaloa and Labs enable fentanyl Security single since and deaths example, XXXX. have increase drug Homeland crimes. died drug for and activities XXX to day over an overdose was from Fentanyl DEA XXXX, trace in Americans traffic X.XX amid stop In of

a sink that minute. in Let for

these stats the of our We $X.XX ask. the going the we special reported sit those this and at of are the figures. and may that in X.X beat to target of understands FFO X.Xx. offers. bolster ensuring facilities This Our that we're continue breadth actively the REIT, not market to Easterly an going what Street boring, be year, I share, core you're but combating midpoint We're to agents office leverage comfortably per the know and

new properties on facilities by use and there [Technical leased These to to agencies transient for acquire Difficulty] in develop offices We commercial portfolio. continue not are focusing and government facilities our

capital Immigration pipeline to Texas, we technology Dallas, near Information of stability X value-add lease XX.X-year available square maintains for leasing future feet weighted and a flow average a the term announced of rationale systems modernize Earlier X,XXX of capabilities. human as an the renewal all growth maintained its tenancies acquisition spreads enables is and deal this ICE's seen technological month, favorable its robust is huge Enforcement We've Customs behind of XX% and our leased as opportunities. IT cash office bolster clear. an at facility for initial which and The this The facility additional opportunity. a

All enhance existing agencies maintain as liters properties specialists portfolio definable occupancy such as in significant Tracy, emergency centers This our Dima cash in is edge the strengthen mission-critical federal in our and upside acquisition California our X flows, management Tracy, with distribution X is X within warehouse. line factors emergency that of the and real X within estate. United XX in stored States crucial helps minutes. of mobilizing at is between Amid capable meals the wildfire threat the for on-the-ground natural million response X the preparedness. million other supplies support property California, of disasters of ongoing and water facility and to provide

mission-critical and year. a like other distribution drugs forensic illegal pieces fentanyl scientific deadly facility laboratory DEA and society, Administration enforcement law to store similar our in Enforcement that in California Drug and personnel the Pleasanton, of deadly XX,XXX support over of each into providing Our we who the oftentimes evidence and purpose, agents serves special prevents

approved during the funding DEA's count manufacture its increased the to increased over and of substances. over rose X% controlled the and period Meanwhile, same XXXX XXXX, head total distribution X% combat between and

As of commercial These mission-critical the definable estate. abilities purpose-built edge estate and the real strengthens continue agencies bedrock government value which we maintaining deliver. safety real country, fortify serve continue shareholder facilities we the their through of in the to to its Easterly's be our as

our state expand more continue buildings our no to adjacent government by well high as provide the accretive will positioned sell the the to and Frankly, have plans continuing to with local to is buying sheet. with we agencies our work stockholders developing to and strong value future partnership in mission-critical partners. to continue buildings continue we Easterly to grade deals, believe protecting balance government portfolio and and U.S. creditworthy pursue government We near we and

planning the constant in are and dialogue mode. in We Board forward with

delivering full remains cutting for FFO In by operating and X% in of we continue enhancing in to XXXX. government. future or addition which backed X% meet portfolio growth, to costs exceed our are on will the excited to trajectory. external value credit core cash laser-focused the We're year [indiscernible] of ability our we shareholder both this to of Easterly growth foundation bright aid believe U.S. a flows delivering and with The our

company's Baivier, and call the And to I'll over President now turn Meghan COO. the

Meghan Baivier

good by establishing in and we We start public our to undervalued off period low deliver. the to Thanks, company, years, defined clearly is morning. of Daryl, believe XXXX of pace flows goals for attribute government-backed our are have these the past We our that that been on markets and the we started cash XXXX and few recent change. growth.

acquisition to have delivering to FFO and further will that our to of growth X% of Dallas, X% come. goals pipeline the of strong, we delivering years see rate our . We believe stated year-over-year flows predictable for trajectory opportunities accretion launched run our growth We Ice cash our with meet our to ability shareholders.

unique For example, pursuing lead we a are to serve as opportunity

[Technical Difficulty]

Flagstaff, federal change an a term. be ever [indiscernible] the will and company's in have This believe organization. look judge American project of is lead nation's expected project. brand-new of Native assets forward lease buyers federal expected for inaugural Arizona, to we is the the We X growth e-mail meantime, to net keeping build-to-suit XX-year you first-ever important courthouse development to we the silver mission-critical first In this develops. that trajectory House this secured apprised further as development

XX at continues Our for renewal this third as meaningful while DEA of years, owned by in-place we marking renewed renewals portfolio another asset spreads. achieve the to Easterly. perform Albany We

how say but from far are. hearing me once are just You this sector highlights sick it, again, we the office of probably

duration defined the of where period and us our our work of importance flows, we into and from a our in such assets the and but being in in accrue our be believe to mentioned, a renewal edge detail, we mission-critical ongoing Daryl our in serving at cash dynamic the go discussions. will replicated apparent As performed peers. importance benefit Allison home greater cannot are creditworthiness estate real the buildings is and our of separate our will

As notable names have from hold we the stand their our crowd. take down earnings should apart seen guidance, [indiscernible]

for attractive opportunities filling We growth delivering our are also for see projects mission returns shareholders. with the Easterly. serving We the in government excited trajectory growth while further in about that new of the

turn will call I the to that, Allison. With

Allison Marino

Both grew everyone. basis, a the financial Mehgan. $X.XX, $X.XX. Thank net and on report I'm share to core was per diluted to fully income you, per Good results for first share pleased the FFO quarter. morning,

Our limiting hitting debt midpoint and of in amended margin comfortably our maintains Easterly revolver, our under the to a facility to predetermined million. . We unsecured seek a X.X ample of reduction of towards broader time minimize with a target result more distribution metric. was sustainability a also we of Easterly credit to while exposure. rate leverage at management sit real the spreads estate range be X.Xx on high underlying market at focus cash have strategic included, for rates headwind a or been expense Interest the interest goals. certainly that ESG $XX.X available treasury our floating company's achieved continues as for rates, recently, capacity senior a the

mentioned, a market Meghan growth external see mentioned estate is of ahead. for real we opportunities our Daryl focus, mission-critical and As primary

ability our Our with maturities a on that planned integral upcoming of and for buildings, is access this an and markets we to growth. pride at equity ourselves harvesting needs Easterly, manage a manage portfolio to capital we At debt purpose-built purpose-built portfolio team.

creep assumes guidance venture closing the on mission Everyone we year of guidance to $X.XX, million VA core have the joint finding Our $X.XX per at managing XXXX a this the share later its Jacksonville to maintaining positive portfolio, at diluted of that Today, million and are $XXX This year in furthering $XX.X organization of basis. rata efficiencies million for we to re-leasing at full will $XXX throughout a of of range to development-related pro our value committed company gross is through spreads. acquisition price all fully expense and the the operational contributes shareholders. FFO driving for

[Technical Difficulty]

during FFO growth morning We to this for strong With delivering for path and charts its investors. risk-adjusted for this this this you year. appreciate a that, represents believe of we deliver a partnership. core for earnings course XXXX. your long-standing share Easterly market-leading midpoint, led sets thank per return your time to shareholders our and opportunities At

Shannon. I will turn now back call to the

Operator

comes with from [Operator Markets. John BMO Capital Kim Instructions] Our first question

John Kim

about growth X%. release, In talked your press you X% to earnings of

targeting what bit were I think lower that's you a January. little in back than

is there I more spread term, the to known investing that's wondering have? has the whether a just or become Or So in that's was that if simply it asset move-outs near anything was difficult? headwind you earnings sales

Darrell Crate

the on appreciate things Yes. that shared to X% what No, Day, working of I every path is one Analyst we're At we're which question. day. a to -- the company, for Really the thanks pursue grow that's for our it.

our the into guidance discussions the was it of in X%, wind, going continuing to think were of with out we kind in, going be were it idea Day going clear to we that office given decline. sounded as I like after became Analyst that especially the environment

So we modified like seems X%, the expectations to very to which step. X% reasonable a

going we're exceed every hit those on, And targets, them, given we're we to and working the that things may happens. we -- think to well and very that we're can working day

our today beginning same the at view the was business as So the on is of it year. the

cut to going costs are to numbers. make We our

We got are fantastic that developing facilities that continues we've decades. build, properties many going government will into a terrific the we're Xs the I for with with think to and pipeline be -- to

all that next lay to So quarters is dividend. as couple very we of able why that the [indiscernible] comes our for some optimism excited also also we're out, exuberance and about which together, have to be

John Kim

think environment I Just wondered guess have following PBRB as there at been with... outlook that I wondering by up to that agencies XX% last headquarter if using has pressure on I Darrell. rate recent only space. reports, was one Is your reduce just to earlier, interest I the was the well I into among agencies. January. was there any changed government on as leading federal since it all of played that, month the costs mean,

Darrell Crate

The kind at up look laying of specifically excited. cut up, the shareholders. that make and none path on curve Again, that we out not said, to means model it for because a it so right. bit. just yield absolutely changes it outlook, curve The we're we're annoying of and you're all the creating, X-year for our little work to work. time costs way a and or That we're term a model go goes super gets we it harder have We

And order a about instead CVP, sense pictures patrol the There's that what though Lindsay And seeing the get not see going what meeting are out no And putting outside. were Sinaloa focused are be California the stay to our will making and safer. what look do seems reduce to We was buildings can on building on they you they deeper. working on border talking and they -- just to I people. sort -- with and on who are to happen. can We're every a make move do. it coming cartel little secured And sure getting the point that reach. to dynamic is a have what partner that building from have mission, from growing. they control. people dialogue what sure sure folks again, they people we all the stronger. We've we they start I'd need more we start in to there's Sentinel what because -- inside. make is to. pretty we've there's good how need they just day, that we're sure knows these it's exactly created of going facilitate to a do brief, what's definable as border and with we're the our that going serious buildings. that. That to beyond And it really making edge And we utilization, built get they in the We in to our that make on they have we're happen is showing need, an website rooms make folks how their immediate fentanyl. need are facilities nobody I Easterly China. at it is to in American government, a you problem the on it's everything we -- a come that there, my when together nothing We're -- that about make did some budget that, projects, do in And the if we on have different do and know got said about you in there's referring plan space a population from dig has I moving problem plan sure and then doing their -- of . We intensely that's our go going walls, is within well-maintained even things about and and The facility in a that the the what it DEA, -- believe floor than they offices on mission

more shrinking, it we of a play can shrinking because feels or your is and FBI like whack-a-mole the letter believe look, any so so it happening in sends investor think so is me, bisoskepticism government these what's super Really work it's competitor to on the sort and the question appreciate home, we and I to of again news. with with meetings, a out And we and governments the in it. investor IRS It's every direct of I to people And chronically touring again. this been -- the then from we call, we're that Department get like shrinking. regard helpful us so we you calls we it's the our buildings. the Education mean, wish not had what's And -- hear doing the nice buildings I've work because could a competitor, year. good aggressively show And just

it that. do this. ] all does help the that that watch We'll doing One understanding is how are we modify government, much suggestions complementers they're sometimes but our appreciate would quick facilitating your because deeply for around And And focused this taxes doesn't doing money we're will you? for at and we mission and we could facility. mission in filing to X by that to and every -- thanks what the this the off facilities, time. fight them giving it. really cost we job do we're how are their on would and and say not we very getting government the But what we'll move make I it. [ they "Hey, and opportunity the from on reality We So complements pay about see, wall. do lessons is We'll

are to rationale send create so here's And we say, and those headquarters can plan when move your the and "Hey, back forward. us actual able projects to

how what that's have we investors portfolio, do and can partner. each and again, folks our the we're as so more very else we who own And helping a That's day. anybody And understand than every out there. different

I folks what we're what of building. think and own that will be proud they

Operator

Griffin Michael from comes question next Our Citi. of

Michael Griffin

full to year of a go puts wanted second I to takes. and and for back some the maybe guidance through run additional just kind

from should maybe $X.XX get the throughout it, see the of accretion the about cadence beat quarter, you a How kind think in earnings ICE I as some So deal. of we you more year? per of on ICE rate be And the could helpful? cap terms color provide the square then on also, valuation in if deal overall and foot anything some that would slight

Allison Marino

what start Okay. us. comprises and with what can guidance I it our entails

-- our So $X.XX growth reprice. Meghan And is [ improvement [ ] G&A touch of to $X.XX of and little swap in on X% ] of from XXXX bit $X.XX margins $X.XX of [ reflects will and by ] Dallas. $X.XX to the guidance X% to then offset same-store $X.XX to rate interest a that headwinds savings,

Meghan Baivier

Yes.

a that we're a it's that it's mid about at million, So -- [ under rate a size ]. $XX third of sort penny about cap level Dallas run expecting was [indiscernible], of a and of rate of little cap accretion

block as to to the our our look that structure higher with that. in continue the initial as it on portfolio, mid or also is to could same-store piece X% so and And on strong from And we . NOI that to guidance continuing in building at cost to laid that or range. is range meet we some a beat of the above continue, expectation the to right, Darrell It's ability X% grow as is absolutely build a a year where a that place we also performance out see upside. continue through said,

Michael Griffin

helpful. in drive And cost to DEA say big maybe with a spread part Meghan, in weighted And earnings justify forward. today? it to spread That's be story would order of you. to about is is you'd external growth to Great. average need And the property? sticking today? your what you of going investors Obviously, investing correct as a the is going what's think capital of minimum a

Meghan Baivier

Yes.

So Greg, in and where an of are multiple debt finance -- in looking level. a given capital our we can the today as cost mid- avenues we the be understanding of we of look at market of being to spread to investor that course,

is so acquiring what mid-X, to . assets to Xs in is looking we're of in example Dallas And that. very the high much an do

Michael Griffin

equity of maybe equity it your there, kind to maybe terms or is the the in as to it's fair equity in financing opposed greater And Yes. deal, debt, differential side debt of half debt? to half say and

Meghan Baivier

sort as weighted . Yes. and debt average think give Triangulating Yes, taste about we mix EBITDA or XX% at you're equity take and looking capital. multiples. of range in that

Operator

question of Jefferies. Our is next Peter Abramowitz from

Peter Abramowitz

Yes.

of little your some a with comments of more helpful. on dig to structure. to bit revisiting the some Just But That just about into square comments guidance that there. expense your was trying

expense provide kind targeting? earnings, has perspective, reduction, some Just whether just brackets you're you a from what wondering sort dollar margin impact kind or of an if number the absolute that to of of it's could around

Darrell Crate

workflow question. systems our a is really No, Yes. because little other and a what months We're bit of the processes than of REITs. just we couple assessing do all great a different it's into

that of an talking but be and spend between to we least XXXX government, partner -- and And a -- are relationship that to also the time want And we see on I executing are the to So outstanding the value we possible. savings about excellence. has structure we in we sure burden cost way cost think trying we'll lot some to a that make again beyond. want in

on structure something And some pick that's that reassess target from since under rocks property us buildings an moving how opportunity everything leases our find for going we going to renewals. do great the because to find of do for how we be, we're public. a we've but each will we focus we very that don't everything had we're interest to we to have years And we how just almost nice the and up. that financing it's growth So combination, management we've we what efficiency a in XX point with to been for rates our

way our We some continue there's bit grow obtained to advantages infrastructure think scale more of a every in that to of we find. sort I but of

-- going don't sound And easy. to mean to while be that so we're exercise, pursuing I make also it we're

anything come we X which the points less and wasn't seeing portfolio. offer are -- us. had was X of at we'd cap taken a building the put to think than that is not starting our a unreasonable there's to I We in match say $X XXX for high we what an acquisitions a There's that, doing X.X% was are that, available. was capital to in buildings conversation was going mid-Xs. If find why see But that and higher lower, sellers point, basis building still it billion that cost be points have gosh, in that than built seller because of to through we loved then and seeing ICE a that be you're would there, million high-quality kind of buildings balance Xs, the criteria refinancing, call and it's probably couple XX are pressures not works that skim we're plus a we basis buildings Dallas mean, have -- meet on team's the we had. the spread add, to buildings for of acquisitions it I forward. in find X value move move we ground our buried feet in square and I'll of of market X,XXX in is us buyer. to this the criteria this being relationships of you it's I is And and in give with the which kind And our get all script. the do dollars space, job and is it And a extra advantage to this use we're example. agencies our and in and direction our hundred that order think sheet that of

we there's a than areas more doing there to a are if expand buildings. And way because task job intra-agency ever at good agencies work to seen I've before. of force are do But our that, or today

So the of that's is idea -- special creating a facility space facility terrific a activity joint a opportunity. joint

Our FDA lab in Atlanta.

facility. of come it, -- the is be you the extra have Some States. -- an amazing lab is premier see in mean It's to it in I will room it. it think but it it United has plenty of I FDA And

our that, And today. none make significant with FDA there of of opportunity is within center in a a excellence that to is and that underwriting

So growth. that I that but the nice are finding place we're mean delivering very and where accretive basis cost to structures a about think easy, on make a growth talking I we're sound the get spread between acquisitions some us the path don't into will

Peter Abramowitz

this in think to That's have I just portfolio. helpful. year to on, address touch X And the you remaining expirations

Allison year. So laid out, parameters from growth full the around think, some expecting what you're for NOI I

you rent on midpoint? that roll kind touch and of of assuming the up your potentially Just your guidance to to there. what get budgeted rent into curious how down assumptions you're if or And you could sort roll

Allison Marino

Yes.

me, no that TI had XX renewed completed not the But quarter regardless about Omaha, with I do if optimistic the [indiscernible] the at of the and has that the renewal a that duration leases in we material be excuse took XX the back about broadly the at about dropped extended portfolio the to we the remain we're the years, speaking, FBI dial stated the sustained right? we're ongoing and around All to whether But to sort of [ auction material the obviously leases. change XX% -- to we expect leases So look we then renewal as year. on at success Peter, rest to we'll levels the spread expected again within the process we the point speak And Portland were quarter, of ] FBI through call, our end that optimistic of occupancy XXXX, expectation. the and renewing fourth of the rest XX.X successful of expectations really of levels. end or very off and portfolio

Operator

Our next Balachandran question of Aditi RBC. is from

Unknown Analyst

on Flagstaff development the Congrats announcement.

if little wondering Just about information more get a that. we could

you If could it. provide

you to break yield expect expecting guess, I the when you're things budget ground to that. like where So

Meghan Baivier

Sure.

year. the is today, fourth that the $XX court million. the to into project won will staff, ACE it as -- we we touching said, So [indiscernible] it's design third, of new the -- ] costs get this just [ as federal developing quarter the [ Arizona get in award we It there. going into estimated ] we're And early and will underway

Operator

Our next Poppel line from question comes the Harry of with Poptech LP.

Unknown Analyst

state have that? months maybe report much going . talked haven't previewed you Do anything X, on You you ago the market. about about the property initiative initiative into new -- X to

Darrell Crate

we at We've basically California, buy say pipeline. workers' quick our I'd to one We are, headlines plenty is Anaheim, the place. of adjudicated it's in about excited you exploring area that be did when got to time claims we're what the a look in by is opportunities. continue developed And robust in Yes. be the terrific compensation terminates, going building it. and very a that lease

will that earnings to in certainly, think a of that bit every and happening deals some We a be across our in to little going series later. accretive real maybe probably opportunities. a 'XX week see are we'll of And continue whole I through XXXX, be will contributor work states

U.S. So This the our activities facility a in that agencies. just many this building in far guidance. contract just be space. government somebody should that to time we're market, affect we're government be to may opportunities with to buildings and credit a and because we doing to the won't the place probably it's won't also today enable building addressable of that we've a is Likewise, is And have buildings able adjacencies. find a us be that way that that worked who are government we and under contract easier will to their United an opportunity, develop onshoring total opportunity one we come for But meet buildings buildings that obligations some period year's this for new the terrific high government -- folks and about it's we not for them their in where very the of significant like have have for so particularly uninhibited. a really to have And significant government States. building in understand that are corporates built talked long-term so, will take will

Unknown Analyst

think would One seen of pockets REITs the small Have you certain there's any whether a might states. acquire business be hold states? others to in in of got in that to properties property might several or opportunities that just as be some states owners, structured they're the acquirable that

Darrell Crate

I Well, think, yes.

and X So see and that be certainly which we relationships we've We cultivate it's and them. X, folks portfolios X in been the federal decade, fruitful each because portfolios. with we last one are sometimes in sometimes X, plenty we'd to space have attract call those material in folks of years. most excited with the buildings we for of portfolios, working and who work We months about understand those X

state's know So but get a there, how opportunity, hasty match of and on about we the that these the this satisfy that for happened, the kind to high-quality which so going because can have don't we what have that very not to want find a and they and getting learning time to a buildings be you're created how something, who can space, to develop escalators. those or it's We lot we're portfolio moving but is they spending on know us. dynamics really leases we mission, school work. a buildings also of find right strong only to folks

So my here, not friend, hard time get Allison sales. such for will same-store will a

we're we to it that be looking X% we over the us for when to 'XX, we of -- can to start knowing nice on. As XXXX, year lights to growing the X% in somewhere turn really start range 'XX, -- would the X

place discipline. It was growing. don't that. exercised is thing we when we that the markets we changed in And X a that found to of abruptly, right ourselves a we And equity do the of found the the where when weren't like market lot challenges

And we called it sort early. of so

all we or being If about we think X sort REITs, think and folks beginning accretive healthy job. we're us year, of we look of things are things. We're as we're probably picky I which we forward in our that's space those be of and it some of opportunities. the of end year, good find the acquisitions for get it, to stopped with. because we're I through doing of lots talking months, to to finding I before can those office news about today again you're harbinger the maybe that of buying going a as of think X bunched guidance And and our announce part sorting other a

own So of folks -- we're meeting who lots with portfolios.

much of months, and hope know company opportunity, of the our these XX% local. them I state you of both XX% and adjacent comprised almost the in properties, X properties, each very lanes any, XX send If we're on adjacent is X/X of And of next way. executing

Operator

from is question Travis next of Turpin Seeking Our Alpha.

Unknown Analyst

was I about it? a know now. dividend talked that question have you for guys ratio guys the Did right would high and of target time frame you in payout my know a bit. a the target you was, I But range have kind little

Darrell Crate

pennies obviously other on and a the We create to No, next in some our to we XX ratio, a not is which to just where to we've interested clearly that though have hope we may look place about because even clear had growth the plans path maybe lower it, what dividend delivering. to. Yes. look our question to we're goal even a be high our is cutting dividend more in I day, of are below want dividend we've in to the and is future, this, where because XXX% payout little strategy bit payout each be periods very had and in our get than great sooner ratio the every we XX always the covering Travis. relative a out it's that And at where dividend. months we we're and offset that. the than it, like we that And

delivering cash that flows, we're But we something of our consistent given is the believe, of stability doing. dividend capable

X get out of we totally the below years, should ratio sold certainly as X a goal. and the to is next that So sooner payout look getting we XXX%,

Unknown Analyst

you're about next accretive question solved And before. my the you looking things payout and guys next know the XX and else buybacks payout Okay. acquisitions in is, ratio like I get XXX%. something you since talked months once you Is that? that at ratio about the have to XX below talked making with

Darrell Crate

takes I what some generating opportunities, buy given relative we in . that's imagine it our doing. that opportunity. some and capital to But for take longer-term mode should even try We time back some recognized that's going I stocks be investors. by perspective certainly it to Yes, right. we finance at a where capital, price a that see little the isn't, real to we think get really that could -- prices. a is stock corporate of mean to if we're And attractive

Operator

Michael Our is Securities. from next of Truist question Lewis

Michael Lewis

XX% You the rent mentioned spreads.

on You importance occupancy mentioned way and is doing us that. talked you -- to on the the organic you And buildings think the happening in What's in just about specific how lot and are help NOI complementing the goals. your government portfolio the the rent the now think that you a helpful and talk same-store where might work leases. you I spreads. I of that escalators And and some those be the that's potential, of you're growth as on about reporting the track goals

Meghan Baivier

the around like to perspective. a a we goals our points ], I in cost continue sort same-store from And of taken think nice Third pull realignment, that's [ opportunity. as

of talked sitting to we we've point the is that about in potential the of But of outcomes same-store driving is how leases, always to as that that think on. XXX basis our given something growth we've further in market I to right, light The out the step time, the range. XX sort communication had historically structure range. of that arc over NOI can give shying or how

Darrell Crate

I Michael, nailing is be now think comfortable little just because a we're stepping little it perspective might some down which right back, not precision. a on it, false Maybe more number gives

leases I who as -- reasonably I be renew. may with story, a think, of done our are think flat leases. good not have folks maturities for We the until job out familiar they the of staggering

terrific So mean -- it feel think should the be would good is draw if problem points. at it NOI a of have But that sometimes to work. about line XX% years, up. how one we and I couple you company for match can X a The look be That's specific renews years, we were we as inflation. X XX%, years, a where experience. I should can circumstances same-store there through X forward, a building

end we this it growth. kind those sometimes, of in volatility flat. happen, And when creates up same-store staying And

as makes as at that only last we of get And good have it. for some this so hard that's the sense us at of is to market last the escalators in renewal. the the kind your year do market looked and leases something It portfolio that to explain said, is and as end some us into for you're to

going we're maybe we markets believe or going be going that it's be that's X.X% X% that to a in X% where X%, place positive. say NOI to of always to same-store going to to growth to we're . And to something equity it's but think disappointing understand. it's better So are I

agency, high it, leverage stability the our never an flows and was market this, Day going get we because extreme could given have. business on the take shared I that rating think look we to outlier to in Analyst Green were proved back private a of leverage we and as the of premium we is And Street be concept in almost the overall on to the cash true the take when XXXX, the and I but we've on for equity our credit on been we able even others, began like front. rating the Some

flow. So but of we're that's and have leverage in this we stability cash we're a in much delivering higher place creditworthy REITs, the where band

have moving what where doing to enhance can we're begins advantage we and leg mission. spot the in, and to government a flow that's that that REITs, other up third and think of accretive, [indiscernible] it's we're place So on the we getting more for governments that sort competitive being facilities every morning. to being look it's if diagram reason which partner a why And that find great a cash making is of that we a like

sales. that's we to lot, store know go. but want I that's That's a as So where

Michael Lewis

No, that's good.

X think battle. And lot it's perception quarters point. of kind helpful You fighting quarters X talked this would to trailing or I at be a proof trailing about something this show even concept, whether of

same-store has only I that all exploration so NOI. and on the and And they about understand leases, asked the of with mark flat that.

Darrell Crate

total together bunch all But I And think know a readout to better And Yes. be hard understood market, like credit of we given we by still flow more differentiates way. or we'll need to. the us. market to crowd, because maybe there. looking addressable our bit becomes on that to the be we I will what And We're whole Again, that it's think super a expanding have -- some take any is we'll by working best profile And look that folks cash relative continue don't be not the quarters. to sector us the to in accretive able tiny. And illustrate proof-of-concept that can cap growth. much of more lose if easier folks REITs an tenancy Totally linking that to at people agree. just we're time show a very broadly also a here. we're looking are going our spend we're see market buildings little to -- that's not that, cap case, who first with time who us of and the not the our is the lost we

lot sure see all take forward, -- that's at substance high getting we're look think but that so those bring action that that I integrity a And that don't based to to the real not a require forward. addition, story when of wrong make the relative sector. people form us on and the what don't opportunities estate in the numbers folks explaining to it's us, understand But other have we're to in of bringing invest easy

Michael Lewis

-- been of to just question. specifically, growth kind external I right? X asked buyback. relates you feel you've have potential The growth internal So your a as already of about question So the capital. cost equity about X of that question. It cost

said you think I earlier, do debt. you'll equity XX% deals, XX% roughly and probably

while stuck $XX.XX make to the been Can if million ] accretive the stock XX-year your able You've trading . now, share. your is [ $XXX stock your that a below execute back. is is the acquisitions at a you price here execute Can entered plan. into and use you Right forwards plan you

Darrell Crate

yes. mean in levels. obviously we X.XX XX is the And The very answer harder. building. it accretive at very for is the like Yes. is that's developing and good these why Xs. Xs, It's And us Sad in not takes months mean I part the to and build

very about feel good we So view. medium-term that

we'll that, as like very that's Dallas, executed. You we'll and friend which saying, hopefully, will showing accretive, point, is of and concept, little take that look those hopeful like guidance similar here in a find get a ICE at up where well, something conference call our of on And your proof I'm sort Allison other opportunities be to that November, be My we're TAM. we we'll path. have changed and we bit. your

to we're just we Here's when want I is our looking to we delivered it and to being XXXX. This show right research to that's out did. we're going able start now. what think and here's blurt all And we've what results, the don't

mean, if a where I which kind So are, we amount a to $XX but price, stock a this no-brainer. motion. that that had And would of is we relative marginal be

can basically can be show $XX world transparent how of now that things that, we're we're frustrating or that to have to the at And and the rewarded trying is day, you $XX point, every be we'll show it's we're we where make it and for doesn't we on with do price. move grow. we to fundamentally kinds can buy, a to but And the deserve for and case we -- is and all make building the we're going that some stock right think the story doing. executing having what the we to and and along we of building faster, that's folks is follow going we're people buildings you foundation that One have

Michael Lewis

fair issue if it you X.X% to to with say for Is equity at . $XX.XX it ] up with match you -- acquisition an would [ an

Darrell Crate

feel it's is all sure. we it's accretive to ], everything and know where this if compelling. pretty like just there. know out I still the what like compare if can have -- find stock going a we then world that I -- accretive the the yes, -- else what is accretive we and that it is quality we it it's IRRs deliver on Yes, a buybacks, say, don't $XX.XX look talk what's very that's it's make place at ourselves if I bringing out I here we about and when -- mean stock It's there, case the and in got because growth and of [ to we're forward

about incredibly of shared we're with transparent are to quarter-to-quarter about in is a opportunity. what path together. what doing. X% we're always we've why X% which we is can in period, of all don't we're talk X% but And we We -- see interested to very around executing over want we sound on. be so great And And points we're putting but enthusiastic, of We're transition a do as with instead it. folks try and view pleased we

very We should we cash think estate, can flow special that we profile a have can real . create valued. materially a be and buy we edge, definable

Michael Lewis

buybacks, maybe could not talk future, that. about thinking we was about I . in but something the

Darrell Crate

appreciate go. look, the you I There I Yes. No, conversation. appreciate it. and

because know we we we bit what this transcript folks and been about pick we get us a paper I to do think cap a and to achieve. working for read do and are wouldn't very maybe opportunity here months smaller we've didn't in it and transcripts to conference And a doing think could little well. really are REIT hard learn X terrific they'll have these the the to get call on time up don't who it if

Operator

Our is of Crow Raymond question James. next from Bill

William Crow

on clarifications. low, of The capital, but it is get X% like just of couple debt and a wanted cost price, that a incremental stock that is today's today's I Just just feels clarification? based cost to too number of

Meghan Baivier

my was our Again, closer today. the market in a secured think work to opportunities continuing right, match perspective Yes, right, also, to tenors and yes, liabilities, mid-Xs but $XX multiple around, And assets from debt unsecured, an and that multiple issue. yes, and can to equity looking comment in to where price on our is at low we X. the

William Crow

Okay.

that's asset now referenced XXX Darrell, of lots, and you So they cap range you're some -- a[ within you You talking rate not right? and ] right? the X.X Whitehat, still points they're and the that investing, still spread want were basis get

Darrell Crate

But mean, snazzy they've a it's I Yes. halfway, Bill, and it hey, building. made pretty more than

a they that deliver So -- we're that softer, really to you're if a you going little to can give love. us a stock little have price to X and going can the get figures

William Crow

anything, only doesn't buy Building getting is you rollover you're great, doesn't value. X.X% really that but if . rollover don't a year right? It create have on you and

Darrell Crate

That's right.

William Crow

here. at sticking when per At that's cover it that's look year. -- And roll challenge. I inflation average of, [indiscernible] point you the kind XX% doesn't think,

Darrell Crate

no. no, No, Yes.

is with Okay. I'm say just you. yes, One thing to that, I want

be no today the doubt, the recognized anybody the our a long, that the last on so of numbers. they is valuable X, inflation this which some than our I will also reality a cash beyond buildings that ago. because of little But changing it's in X, had on And You better couple see it's that X flow are were X X, horizon our cash more just too over year in now, years years is from of reality math and call. or we've profile it, because that and that again, the can the makes flow TAM I the of bit we have why, the

Xs. on suggestions develop the don't prove people you to we're working to it can we price about that on is in And X% what just can -- to and talking And we it can how and we striving some that's have We're to growing get We a get that's any there. some and the the a doing $XX $XX, like -- stock to, ways showing again, we with you're have a do. of cash flow than escalators good see in yet. us starts that we're of be acquisitions history. to X% you'd ever need different I that again, projects why achieved higher can -- at regularly, And for X% whole we're to job far things will far, that and we've path in are are that see magnitude growth that our going

William Crow

understand that. Dallas, where is I Dallas appreciate that. I Two quick that? real in No, acquisition, ones.

Darrell Crate

That's the airport.

Meghan Baivier

the have don't for I [indiscernible]. address

Darrell Crate

send to We'll it you, Bill.

of happy Dallas go got If to a that have business visit, to you a we're bunch in really want we've tour. facilities

William Crow

the I was eclipse. there just out for

portfolio? that the sort me, X of business how many the for building, are Finally that is tenants nongovernment what tenants those in within exist of

Meghan Baivier

a -- obviously, is [indiscernible]. still do tenancy, our of majority we vast the mean what I

Darrell Crate

X tenants very or It's X few. that private. are

Meghan Baivier

In the building, the .

Darrell Crate

All nice people.

Meghan Baivier

leased X XX% is in to are XX. early private age those and tenants, the through XX,

Darrell Crate

the build. of scaffolding Really Thank only appreciate of it's it's questions Bill. shows because you, we're appreciate And the I direct way it -- trying kind the think the the what to effort.

So really appreciate it.

So have for investors. it's helpful to these . conversations

Operator

of [Operator is from next question Point Merrill Our Compass and Instructions] Trading. Ross Research

Merrill Ross

the to cover dividend the which your acquisitions detriment versus might long-term prioritizing how creation. development the value pipeline, to I'm be desire might wondering be of

has higher not build. than builds buildings It creation older, total saying, that have they're budget what value implications months that acquiring So the for the a I'm They're new you been and see XX longer because CapEx return right? out. you would

the is and the dividend? you So the covering how pipeline acquisition at looking towards Board steering

Darrell Crate

and you or ratio, a payout find on the can recurring yourself of do taking bit dividend growth the a pay leverage, $X.XX from And this tiny, future. conversation to really because had more away good question. so we that that by probably the really, above it's It's a having here at board nonstop meeting Yes. it's exactly in little we're a conversation deciding although take that's

don't it. a issue dividend the the issue -- just pipeline the issue leads we look -- that That do acquisitions. very very dividend is didn't But benefit said, it. accretive -- front is short-term I we to at as which us, in believe a even we we today marginal the And to But opportunities of today, our our the we is see think where as of the think reassess detractor would think that it's development that degree well to we business, price stock context strong, the from sustaining the opportunity for that to earnings. the sustaining in dividend for are outweigh this future we short-term given consistency, some those believe of a short-term

we closely going to -- growth partners new government buildings we're are can we're only as additional estate about mode, in we optimistic be with some and the we doing, that So from very with local government bullish on feeling state are that being escalators to forward. real working not substantial development adjacent

all you what not uncertain. the compared we so feeling wouldn't was for is it feel that as cash take good dividend. business a basis -- and Real points path. of that us, the that friends get flux. are wouldn't Fed where CapEx have look up of the I the makes is in we're opportunity, short-term we We as the underwriting with in buying required about as that's saying If something some got I and to -- not just say, but in we think about just this -- the hundred pursuing, close That's a just down and batten be optimistic kind rates I up like we're estate ago, cognizant every with and we definable government Interest think to where like very for in conversations didn't the to analysis the about couple XX you're think ourselves, portfolio very long in our when is what's is see burden government. As that circle in were where want And our space and our what -- also, you to, us, of hatches, announce we buildings required and But on line again, We we things accretive very business I edge the their can we've we if be find real had we're it. going, dividend we're that optimism months a our to accretive estate feel we're do the we by a we're that reach right. you again, you going don't do XX, our of segmentation flow. is okay, know create, or feel were what the and every ratcheting curve with was yield dividend was very need make when wagons of And problem. finding time and another fund time exactly

Merrill Ross

Yes.

that clarify they're the making more why I regarding decision. just CapEx to might the would some think overpay about dividend guidance we help board's contractual because know kind that of then the tolerance

Darrell Crate

to me. Yes makes . that That Yes. sense. makes sense No

Merrill Ross

. influence. incremental Just

Darrell Crate

strong in that acquisition optimizes requirements at being as but the about deals. day, about that FFO us I can are the And Yes. FFO some life have we in a are deals we is way upon -- think we're think I where place end just to achieve. And there the the we much building accretion the looking as some return in over to are mean we operating -- when for direct, that of very we're CAD capital a mean, the at get that of lease, just

why either when today. stock some got that pipeline. We've we're $XX, were to of some by that's covering got that stock have find get buildings, price that And can challenge find of $XX, or problem our there's a to is say eliminating buildings because just bigger for REIT to those as we eliminating It's means price we've plenty if opportunities because a harder. just don't I And on it CAD that a lower of harder. of is some brought that

but we true, to job enough investors there. a deserve we that's position we'll way deliver the a a our put can make price even where make grow not when more what that's ourselves try it's every stock can day growth. And and facing peculiar and It's is it. we started talk happen. And case where machine again, believe so that to that's And doing and about about getting the is we're in we in to all REIT us, everyone each that can do

Operator

turn Thank you. the Executive Darrell of would closing Government for I remarks. conference Properties now Easterly Crate, back like to to Officer Chief

Darrell Crate

. meaningful stay growth great. trajectory and shareholders. again, quarters Well, First Thank forward returns Government Call. for to thanks for XXXX today, focus Quarter updates as Again, risk-adjusted We deliver everyone, joining our set of for continue in to joining the we on and Conference we you, Properties course, to tuned. our the look sharing premium coming Easterly

Operator

This concludes today's call. you Thank participating. for conference

disconnect. You now may

Easterly Government Properties (DEA) 30 Apr 242024 Q1 Earnings call transcript