Greetings. Welcome to the Easterly Government Properties, Inc. First Quarter 2026 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session between the company's research analysts and Easterly Government Properties, Inc.'s management team. To ask a question during the session, analysts will need to press 11 on their telephone. They will then hear an automated message advising their hand is raised. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Cole Barterwell, Director of Investor Relations. Please go ahead.

Before the call begins, please note that certain statements made during this call may include statements that are not historical facts and are considered forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Although the company believes that its expectations as reflected in any forward-looking statements are reasonable, it can give no assurance that these expectations will be attained or achieved. Furthermore, actual results may differ materially from those described in the forward-looking statements and will be affected by a variety of risks and factors beyond the company's control, including, without limitation, those contained in the company's most recent Form 10 filed with the SEC and in its other SEC filings. The company assumes no obligation to update publicly any forward-looking statements. Additionally, on this conference call, the company may refer to certain non-GAAP financial measures such as funds from operations, core funds from operations, and cash available for distribution. You can find a tabular reconciliation of these non-GAAP financial measures to the most comparable current GAAP numbers in the company's earnings release and separate supplemental information package on the Investor Relations page of the company's website at ir.easterlyreit.com. I will now turn the conference call over to Darrell William Crate, President and CEO of Easterly Government Properties, Inc.

Thank you, Cole. Good morning, everyone. We continue to operate in a market defined by volatility, whether it is interest rates, geopolitical uncertainty, or broader capital market disruption. In these environments, investors tend to focus on businesses with durable cash flows, strong tenant credit, and disciplined capital allocation. We believe Easterly Government Properties, Inc. continues to stand out in each of these areas. Our portfolio supports essential government functions that continue regardless of economic cycles or external events. These are facilities tied to critical federal missions, high-credit state and municipal agencies, and select defense-related tenants. The durability of those missions and the strength of those credit relationships continue to provide a stable foundation for our business. Importantly, we believe our portfolio is often misclassified alongside traditional office real estate. That comparison misses the specialized nature of what we own. From our FBI offices in places like El Paso, New Orleans, and Pittsburgh, these facilities include secure, classified environments, SCIFs, and other controlled spaces where sensitive law enforcement and intelligence work is conducted. These are highly tailored facilities with spaces that support agency-specific operations and are difficult to replicate. They serve essential functions, benefit from long-duration leases, and are backed by some of the strongest credit tenants in the world. Against that backdrop, we remain focused on a straightforward strategy: growing earnings steadily, allocating capital thoughtfully, and continuing to improve overall portfolio quality over time. Over the past several years, we have taken deliberate steps to strengthen the company, including leadership transitions, resetting the dividend, and maintaining additional capital internally. These decisions are not always easy, but they position us to enter 2026 from a position of strength, supporting a robust and sustainable dividend while continuing to deliver consistent earnings growth that outperforms our peers. Turning to the quarter, our portfolio continued to perform at a high level. Occupancy continues to outpace our REIT peers at 97%, and weighted average lease terms stood at approximately 9.4 years. These metrics reflect both the quality of our assets and the mission-critical nature of the work taking place inside our buildings. During the quarter, we also completed our first mezzanine investment tied to the development of a new VA outpatient clinic. This transaction reflects how we are thinking about capital allocation in today's environment. While traditional acquisitions remain central to our long-term growth strategy, we are also identifying adjacent opportunities that can generate attractive current returns while preserving future optionality. This investment is expected to deliver a 12% yield, is backed by a committed federal tenant, and allows us to remain connected to an asset that may ultimately fit in our long-term ownership strategy. VA facilities represent one of our largest portfolio exposures—that is by design. These assets are highly specialized, tend to be very sticky, and are backed by the credit quality of the federal government. We were recently at our VA Jacksonville facility, and it was filled with veterans receiving the care and services they need—an important reminder that these are not traditional office buildings, but essential infrastructure supporting a critical mission. We also believe that the administration's increased focus on defense spending represents an additional tailwind for the company, particularly as it relates to external growth opportunities. As we look to the year ahead, we are encouraged by the strength of our first quarter performance and our ability to raise the low end of guidance. While broader market volatility remains, our priorities remain unchanged: disciplined capital allocation, operational execution, and consistent earnings growth. We believe our portfolio offers investors a compelling combination of income stability, long-term growth, and exceptional tenant credit quality. With a leased portfolio that generates a AA+ revenue stream, we look forward to working with the credit agencies on achieving an investment grade rating in 2027. To wrap up, we are pleased with how the year started. We are growing earnings, maintaining strong occupancy, allocating capital thoughtfully, and continuing to improve portfolio quality. We believe that disciplined execution will continue creating long-term value for shareholders. I want to thank our team for their continued focus and execution as well as our tenants and shareholders for their ongoing trust and partnership. With that, I will turn the call over to Allison.

Thanks, Darrell, and good morning, everyone. I am pleased to report the financial results for the first quarter of 2026 on this sunny Monday morning. The underlying growth in the business is clear. Total revenue increased to $91.5 million, up from $78.7 million in 2025, a 16% year-over-year increase. This was driven primarily by acquisitions completed over the last twelve months, contractual rent growth, and continued lease stability across the portfolio. EBITDA also grew meaningfully, increasing to $57.3 million from $51.0 million last year, representing approximately 12% growth, reflecting the expanding earnings power of the platform. Most importantly, that growth continued to translate into higher earnings for shareholders on a per-share basis even as we raised capital to support portfolio expansion. On a fully diluted basis, net income per share was $0.03. FFO per share increased to $0.76, up from $0.71, representing approximately 7% growth, while core FFO per share increased to $0.77 from $0.73, or roughly 5.5% growth year over year. Our cash available for distribution was approximately $32.2 million. In terms of our active development projects, we are on track to meet previously communicated timelines. Our Fort Myers, Florida lab project is expected to complete and commence its lease in 2026. That will be followed by the Flagstaff Courthouse in Arizona, which is scheduled to deliver in 2027. Finally, the Medford Courthouse in Oregon is anticipated to complete during 2027. The delivery of these development projects are natural delevering points toward our medium-term cash leverage goals, as the NOI comes online and any agreed-upon lump sums are received. Turning to leverage, our adjusted net debt to annualized quarterly pro forma EBITDA was 7.3x, edging higher during the quarter due primarily to the timing of equity issuance relating to our Commonwealth of Virginia acquisition. Given the share price volatility the broader markets experienced in the first quarter, we elected to defer issuing the majority of that equity, and we expect to complete the issuance by the end of the year. As Darrell mentioned, during the quarter we completed our first mezzanine loan investment, providing $7 million of financing for the development of a new 120 thousand-square-foot VA outpatient clinic in Kennewick, Washington. The loan carries an anticipated 12% yield and supports a 20-year firm term lease commitment from the Department of Veterans Affairs with an expected project completion date of October 2028. The transaction is backed by an experienced VA and GSA developer sponsor, who our team has known for decades and Easterly Government Properties, Inc. has transacted with multiple times. This allows us the opportunity to acquire the property upon completion as well. The investment enables us to generate attractive current returns while remaining closely aligned with assets that fit our long-term portfolio strategy. With the successful closing of the mezzanine loan during the quarter, we are raising the low end of our full-year guidance by $0.10 from $3.5 to $3.6, resulting in a revised full-year range of $3.6 to $3.12. While performance year to date is trending modestly ahead of our initial expectations, we continue to take a disciplined and cautious approach as we evaluate the remainder of the year, particularly given the ongoing uncertainty in the interest rate and broader equity market environment. At the midpoint, our guidance assumes that we will have $50 million to $100 million of gross development-related investment during the year, and $50 million in wholly owned acquisitions. We continue to maintain a $1.5 billion development pipeline, and we are beginning to make meaningful progress on potential transactions that meet our investment criteria and can be executed at a spread to our cost of capital, either independently or through a partnership. We are staying disciplined on capital allocation, focused on retaining our tenants, and executing across our development pipeline, all in line with the strategic objectives we have communicated. These are the fundamentals behind Easterly Government Properties, Inc.'s stable and growing cash flows, and we believe this will drive shareholder value. Thank you for your time this morning. We appreciate your partnership and look forward to updating you on our progress. I will now turn the call back to the operator.

We will now open the call for questions. As a reminder, to ask a question, you will need to press 11 on your telephone. Our first question is from Seth Eugene Bergey of Citi. Please proceed with your question.

Thanks for taking my question. I guess just starting off with the mezzanine lending piece. Is the $7 million kind of a one-off transaction, or is there something you would look to do more of? And how should we think about the sizing of that if that is something that you would think about doing more of in the future?

Yes. It is a terrific way for us to get involved early in a project, and I think we could see ourselves allocating about $30 million to this pipeline. The VA pipeline over the next four, five, six years is quite significant. There is a set of terrific, well-respected developers who really have a knack for building these well. At $7 million, roughly $30 million allocated to this effort would get us involved in three or four projects, which, again, as those buildings are ready to go online in one to two years, positions us very well for them to become part of the broader portfolio.

Thanks. And then it sounds like the size of the pipeline is kind of unchanged at the $1.5 billion, and with the Virginia campus closing you have kind of hit the acquisition or most of the acquisition guidance for the year. Just how active is that? What kind of catalyst do you think could unlock more of that acquisition activity? And just trying to think about how conservative that number is.

We are very active in working the pipeline and very judicious about making sure it is accretive. As we look at our earnings that we are delivering for shareholders this year, the midpoint of the range is 3% growth, which I think is very favorable relative to the REIT sector, especially given our AA+ revenue stream. I think things will pop out of that $1.5 billion. We are maintaining a very wide funnel on opportunities that are all high quality. The intent for that wide funnel is for it to narrow down to some opportunities. Given a bit of our cost of capital challenge with regard to stock price, as we improve on cost of capital and debt and we continue to find opportunities, we can do things that are attractive—accretive not only to core FFO per share but also accretive to the portfolio in general. There are a couple of very large VA development opportunities in that pipeline which would be very attractive. We have built relationships with folks over five, six, seven years, and ultimately, I think we will be able to work some things out with each of them. We want to make sure the promises that we make on this call we can keep. I think that we are delivering strong growth, and we are very optimistic about what this pipeline can produce over the next one, two, three years. That is why we are confident in saying that our long-term growth rate for the company is 2% to 3%. As we work with the rating agencies and achieve an investment grade rating, that can also lead to our growth targets increasing as we refinance over the next three, four, five years.

Great. Thank you.

Our next question is from John Kim of BMO Capital Markets. Please proceed with your question.

Thank you. It sounds like you are moving forward with some investments in your acquisition pipeline of $1.5 billion. So I am just wondering why not update guidance in terms of investment activity, and can you just update us on what kind of spreads you are looking for in terms of investment versus your cost of capital?

We have thought a lot about whether or not to update guidance, particularly with respect to the acquisitions pipeline this quarter. As Darrell mentioned, we are being conservative as we evaluate near-term opportunities within that pipeline and would look to update guidance as we are closer to those deals being fully cooked. That does not reflect at all what we think we can do; it is about being disciplined on how near-term the opportunities are. To the second part, we target a 100 basis point spread to our cost of capital. This mezzanine financing transaction creates about a 600 basis point spread for a fairly nominal investment. We are balancing all of the opportunities—mezzanine is an example of one actionable opportunity in our pipeline today and one that we will continue to evaluate. Our target is 100 basis points, with 50 to 100 being our defined range.

And on the mezz book getting to $30 million potentially, is that something that could happen this calendar year, or could you talk about how fast you want to get to that $30 million over the next period?

Over the next eighteen months is when we can get that deployed. We have delivered some strong growth this year, and we are setting ourselves up for a nice 2027. We will continue to be deliberate about our timing.

Are these on projects that you feel comfortable owning, or do you plan to own some of these assets?

Yes, they are great assets. How we are legging into them is attractive for shareholders, and these are assets that are, in our view, good long-term holdings. Given how we are entering and where we are in the capital structure, we can buy attractively.

This is an area where we have deep underwriting expertise—not just on the financing product, but the underlying collateral. The VA community-based outpatient clinic program continues to expand. There are 20-plus projects coming through various stages of procurement, so we expect additional opportunities in that space, though there are other GSA projects coming on as well.

We understand these assets well and have long-standing relationships with developers. We are effective at developing mission-critical projects and working with the government. At our Fort Myers project, run by a terrific group, we are working collaboratively. We can make suggestions that save cost or position the building for more attractive operating costs over the next 20 years. We are a strong mezzanine partner, and given our current cost of capital, it is an excellent way to get involved in these assets. We are excited for the growth that this can mean for shareholders.

Our next question is from Merrill Raw of Compass Point Research & Trading. Please proceed with your question.

I am sorry, was that me? Yes. Okay. The sound dropped out. Okay. So will any of those VA projects be acquired by the JV, or is that entity filled?

Great question. The answer is it could be either. While we have a very strong pipeline, we are also more active today with potential JV partners, and we have excellent long-term relationships there. These assets can be wholly owned if they meet our criteria, but if there is an opportunity to partner that preserves attractive economics, we would pursue joint venture structures as well. Our north star is delivering accretion and securing projects that provide a 100 basis point premium to our cost of capital. When thinking about cost of capital, we consider equity pricing and FFO as cost of equity—because that drives FFO accretion. With a dividend of 8% and growth of 2% to 3%, we can vector into different types of transactions but we give little credit for future growth in our cost of equity when determining required spreads. FFO per share growth is the primary metric for this management team.

Great. And as you look at your pipeline further out, is it primarily federal government? You said outside the VA there was activity, but is there also activity at the state level? The Florida acquisition or development is pretty lucrative, so it would be interesting to know the mix.

We like Florida. Many people are moving there, and there will be ongoing demand for law enforcement and related facilities. The project we are working on is expected to be delivered early and on budget. There are multiple similar projects on the dashboard over the next three to five years, and we are well positioned to be a partner in those efforts in ways that are attractive for taxpayers and accretive for shareholders.

On the broader pipeline, think of it roughly in thirds: about one-third federal, one-third state and local, and one-third government-adjacent. The mix across regular-way wholly owned transactions, joint ventures, development, and mezzanine financing will vary, and the pipeline includes primarily regular-way acquisitions as well as development.

The team has built a toolbox of ways to generate accretion for shareholders. Allison and her team are doing a terrific job on the balance sheet, and I think we will have some nice things to discuss over the next six to nine months.

I do appreciate the thought of diversity inside the portfolio. Thank you.

Our next question is from Michael Carroll of RBC Capital Markets. Please proceed with your question.

Darrell, I wanted to circle back on the mezz investment. I know you said a couple of times that you have the ability to potentially acquire these assets someday in the future. Is there a purchase option related to that that Easterly Government Properties, Inc. can exercise to acquire those properties, or is it just the relationship you get that would allow you to be able to negotiate a price as that deal gets completed?

We have a series of different ways where we have an advantage in the purchase. Allison, do you want to expand on that?

Yes. We have both a right of first refusal (ROFR) and a right of first offer (ROFO) on that particular deal, and those are mechanisms we look to build into financing arrangements like this as a first look.

Okay. And then when you talk about deferring funding some of these deals, does that mean that you have to be more thoughtful about deploying capital here in the near term until you fund the deals that you announced year to date?

What does that mean exactly?

I guess on the call, you said that you deferred raising equity to fund the first quarter acquisitions, and correct me if I am wrong on that. So if you are waiting to fund those deals, does it make it more difficult to execute on the pipeline because you have not funded the first quarter deals yet?

It is a marginal comment and is more geared toward our debt providers—the idea being that we will continue to bring our leverage down over the medium term. We are focused on getting leverage into the mid-sixes. Even though our leverage modestly ticked up this quarter, that is not a change in our strategy to properly equitize opportunities. With tools like mezzanine financing and development transactions, we expect to deliver the growth we are promising while getting leverage in the right place. We are directionally moving in the right direction. I have said obtaining an investment grade rating can lead to 100 to 150 basis points of additional FFO per share growth over the next five years.

Okay. Great. And then just last one for me. On the available space you have in your portfolio—the 3% vacancy—what are the prospects of being able to lease that up? Is some of this space potentially leasable within your portfolio that is currently free?

Yes. We are pursuing that aggressively. The FDA lab in Atlanta that we just opened has tens of thousands of square feet that are not leased. The building is excellent, and much of the vacant space we have now was underwritten to be vacant when we purchased these buildings or was forecasted in NOI. We are pursuing leasing activity more aggressively than ever. That would be incremental earnings growth on top of our guidance. Government leasing can take time—often six to nine months—but as we look to 2027, I see the opportunity to lease some of this vacant space and for parts of the pipeline to come together in ways that are unique for us. We are excited for the opportunity and optimistic about 2027.

Our next question comes from Analyst of Jefferies. Please proceed with your question.

Darrell, you noted in the opening remarks the intention to achieve an investment grade credit rating in 2027. Can you just speak to the deleveraging strategy and other metrics you are focusing on to achieve this?

There are a couple. If you compare to similar firms, many have BBB+ or flat BBB ratings. Their revenue streams typically start from single A- to BBB+. Our revenue stream starts at AA+. If the revenue is AA+ and the rest of the capital structure reduces that only a handful of notches, we believe the business is well positioned for investment grade. Scale and leverage are the primary metrics we focus on. We are in the general zone for investment grade today, especially considering our high-quality revenue stream. Leverage is the key metric where we need improvement—and possibly scale—but we are committed to behaving like an investment grade company. With a weighted average lease term near a decade and AA+ cash flow, we are well positioned to pursue this. It may take time, but we believe 2027 is a realistic target.

Makes sense. And then on investments, acquisition target is still at $50 million. I do understand cost of capital is a constraint. Maybe just to ask more directly: at what share price would you be able to become more active and aggressive on this $1.5 billion?

Every bit of share price improvement helps. From where we are today, we do not want to set expectations ahead of where we are. We are happy with the growth we are delivering and will be deliberate to keep 2027 on track. To answer directly: $24, $25, $26, $27 would be very constructive and would help the flywheel start turning more aggressively.

Great. Thank you for taking time. Appreciate it.

If we do not get more support from the capital markets and continue to have this 8% dividend, we can still meet these growth targets. We have built enough tools and have strong joint venture relationships, so we will be able to deliver value. With a lower cost of capital, we would accelerate growth. The team is aligned in achieving those objectives consistently over several years.

Thank you. Our next question is from Michael Lewis of Truist Securities. Please proceed with your question.

Thank you. Regarding the mezzanine loan investments, is this now the preferred way to do developments rather than the large cash outlays and the reimbursement later? Does it make sense to do more with developers and then you become the takeout on the back end? Should we expect you to do more of that and less of the other?

It depends on the project. For example, FDA labs—there are seven more to be built and we have built three. Each one has been a better value for the government because we have been consistent collaborators and have driven efficiencies. We can build high-quality, low-cost FDA labs for the government. For some VA projects, there are several well-established developers who do an excellent job. Competing with them directly may not be the best use of capital. It can make more sense to let a high-quality developer execute the project while we stand close as a mezzanine lender and potentially become the takeout. For other projects—like certain courthouses—doing development start-to-finish has been the right approach. It is about using our expertise to deliver the most value for shareholders for each individual project. These are attractive because they generally come with long-term leases and stable government cash flows.

No, that is great. Thank you. And then just lastly for me, you kind of alluded to a little bit of conservatism maybe in the acquisition guidance or the FFO guidance. When we annualize the first quarter results, it gets you to $3.10 for the year; the midpoint of the range is $3.09. Is that just a little bit of conservatism, or are there any drags through the rest of the year why you would not have any sequential growth?

A few things. Interest rate volatility is higher right now across SOFR and Treasury markets. Some of our conservatism is driven by a desire to see if that volatility calms down, which would allow us to improve our cost of capital as the year goes on and strategically term out our revolver. That is a significant uncertainty. Also, development timing is critical. The earlier in Q4 we can deliver the FDLE lab in Florida, the more potential improvement you might see in our guidance. We are close enough to be excited about an opening party, but there is still development risk left. We will continue to evaluate timing and delivery as we move closer.

Actually, maybe I will throw in one more, because since I asked a guidance question about 2026—I know you are not going to give guidance for 2027—you said you are excited about it. The consensus number for FFO is the same as it is for 2026. Is there anything you could say about what excites you about 2027 and the growth potential there?

If you look at the tools we have created and the opportunity set we are harvesting, the idea of being flat next year does not align with what we see. Some items, like an FAA lab exit that took longer, have been a drag, but beyond that we have opportunities—from releasing vacant space to mezzanine debt to harvesting the pipeline—that can drive growth. The team is reoriented toward growth, and we believe we will grow 2% to 3% a year. We have done it for the past two years and expect to continue if we hit the middle of our guidance this year.

I understand Allison not wanting to give the guidance. A much bigger refi year next year than this year. So if interest rates are uncertain, they are more uncertain for next year. Thank you.

Yes. That is why we cannot give guidance right now, but I certainly would like to. Allison will not let me.

Thank you. I would now like to turn the conference back to Darrell William Crate, President and CEO of Easterly Government Properties, Inc., for closing remarks.

Great. We really appreciate you joining the conference call as we share our first quarter earnings. We are very excited about what we are doing. We are excited about our growth, and we really look forward to you paying attention to the company and spending some time with us. We appreciate it and we look forward to getting together at this time in about three months.

This concludes today's conference call. Thank you for participating. You may now disconnect.