Easterly Government Properties Q4 Earnings Call Highlights

Easterly Government Properties (NYSE:DEA) reported fourth-quarter and full-year 2025 results that management said reflect continued execution on its strategy of generating steady Core FFO per share growth supported by mission-critical government tenancy, disciplined capital allocation, and a focus on balance sheet improvement.

Management highlights durable growth outlook

President and CEO Darrell Crate said 2025 marked “another year of delivering 2%-3% core FFO per share growth,” and added that the midpoint of the company’s 2026 guidance implies a third consecutive year of at least 2%-3% Core FFO per share growth. Crate reiterated Easterly’s strategic priorities:

• Core FFO growth per share of 2%-3% annually
• Improving same-store performance through diversification into state, local, and “high credit government-adjacent” tenants
• Pursuing development opportunities that create stabilized, high-credit assets

Crate described Easterly’s portfolio as mission-critical facilities such as courthouses, public health laboratories, law enforcement offices, and secure administrative buildings. He said portfolio performance remained strong, citing occupancy near historical highs at 97% and weighted average lease terms of roughly a decade.

Looking to 2026, Crate said recent federal developments “specifically DOGE, are in the rearview mirror and did not change how our portfolio performs or how we operate the business,” and noted the company is guiding to approximately 3% Core FFO per share growth at the midpoint. He also said ongoing federal real estate discussions continue to support the case for agencies focusing on mission execution rather than owning and managing specialized facilities, which he said can be complex to modernize and operate.

Fourth-quarter and full-year 2025 results

Chief Financial Officer Allison Marino said that for the fourth quarter of 2025, net income per share on a fully diluted basis was $0.10, while Core FFO per share increased by nearly 6% year-over-year to $0.77. Cash Available for Distribution totaled $29.1 million for the quarter.

For the full year, Marino reported net income per share of $0.29 and Core FFO per share of $2.99, representing nearly 3% year-over-year growth. Full-year Cash Available for Distribution was $118.8 million.

Leasing and renewals update

Marino said that after quarter end the company extended the lease at FBI Knoxville and executed a long-term renewal on FBI San Antonio. With most 2026 renewals already completed, she said the company has begun shifting focus to 2027.

As of December 31, 2025, Easterly had renewed 38 leases since its IPO, totaling 2.6 million square feet. Marino said 27 of those renewals had no associated tenant improvement (TI) work or had TI work completed and accepted by the government, while 11 renewals had pending TI projects. She cited examples in the renewal set including PTO Arlington, IRS Fresno, and smaller leases in Buffalo.

Marino also provided detail on rent spreads: excluding certain assets, the average rent spread anticipated on the remaining renewals was 14%, including an estimated $37.14 per square foot of TI utilized by the government. The weighted average total renewal term on those leases was 15.7 years. She said the company views this as a useful proxy for how it thinks about renewals going forward.

In the Q&A portion of the call, management said it continues to target mid-90s occupancy over time. On 2027 expirations, Marino said procurement has begun in line with typical lead times of 18 to 24 months and added the company has “no concerns.”

Development pipeline and FDA Atlanta project

Marino said Easterly’s development portfolio continued to progress as expected. The company broke ground in the third quarter on a State Crime Lab in Fort Myers, Florida, with delivery targeted for the fourth quarter of 2026. A U.S. Courthouse in Flagstaff, Arizona is under construction with delivery expected in the first quarter of 2027, and construction began in the fourth quarter on a previously announced U.S. Courthouse in Medford, Oregon, scheduled for delivery in the second half of 2027. Marino said the three projects total 200,000 rentable square feet and are expected to deliver high-credit cash flows.

The company’s largest project to date, the FDA Atlanta facility, was completed and formally delivered to the government on December 15. Marino said that as of December 31, 2025, Easterly had received $138.1 million in lump-sum reimbursements related to the project, and it subsequently received another $12.6 million earlier in the week of the call, with approximately another $3 million expected over the next few months.

Acquisition activity, leverage, and 2026 guidance

On acquisitions, Marino said Easterly completed the purchase of a three-asset portfolio in Virginia for $44.5 million, totaling about 298,000 square feet. She said the Commonwealth of Virginia occupies the majority of the portfolio under long-dated leases that include 2.5% annual rent escalations, and the portfolio’s weighted average lease term is seven and a half years. The acquisition was completed at a going-in cash cap rate of approximately 11%, which Marino said is immediately accretive and above the company’s cost of capital, with the pricing influenced by a motivated seller and Easterly’s ability to execute an all-cash bid.

During Q&A, Marino addressed an analyst question about a 2027 lease expiration shown in disclosures, saying it represented about 2,000 square feet and was “very immaterial.” She added that the two buildings with the largest Virginia tenancy had lease expirations in 2034 and 2036.

On the balance sheet, Marino said cash leverage—defined as net debt to annualized quarterly EBITDA—was 7.5x, and she expects remaining FDA Atlanta reimbursements to further improve the measure. Crate reiterated a medium-term leverage objective of approximately 6x and said leverage is an important component of improving the company’s cost of capital.

For 2026, Marino said the company is maintaining its Core FFO per share guidance range of $3.05 to $3.12, which implies about 3% growth at the midpoint. She said the outlook is supported by the delivery of FDA Atlanta, renewal execution in 2025 and 2026, operational efficiencies, and the Virginia acquisition. At the midpoint, guidance assumes $50 million to $100 million of gross development-related investment and $50 million in wholly owned acquisitions. Marino also noted the company’s acquisition pipeline totals $1.5 billion and said Easterly is monitoring the market for opportunities that maintain a spread to its cost of capital.

In closing remarks, Crate said management is “very excited about 2026” and expects to provide further updates in coming quarters.

About Easterly Government Properties (NYSE:DEA)

Easterly Government Properties, Inc is a real estate investment trust that specializes in the acquisition, development and management of commercial properties leased to U.S. government agencies. Structured as a triple-net lease REIT, the company focuses on single-tenant assets with long-term, credit-backed leases that transfer most property-level responsibilities—including taxes, insurance and maintenance—to its government tenants.

The firm’s portfolio encompasses a variety of facility types, including office buildings, training centers, laboratories and mission-critical installations used by federal agencies.