8-K
Easterly Government Properties, Inc. (DEA)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 or 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported):
November 2, 2020
Easterly Government Properties, Inc.
(Exact name of Registrant as Specified in Its Charter)
| Maryland | 001-36834 | 47-2047728 |
|---|---|---|
| (State or Other Jurisdiction<br><br><br>of Incorporation) | (Commission<br><br><br>File Number) | (IRS Employer<br><br><br>Identification No.) |
| 2101 L Street NW, Suite 650, Washington, D.C. | 20037 | |
| (Address of Principal Executive Offices) | (Zip Code) |
Registrant’s Telephone Number, Including Area Code: (202) 595-9500
Not Applicable
(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instructions A.2. below):
| ☐ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) | |
|---|---|---|
| ☐ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) | |
| ☐ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) | |
| ☐ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) | |
| Securities registered pursuant to Section 12(b) of the Act: | ||
| --- | --- | --- |
| Title of each class | Trading<br><br><br>Symbol(s) | Name of each exchange on which registered |
| Common Stock | DEA | New York Stock Exchange |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR §230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 2.02 Results of Operations and Financial Condition.
On November 2, 2020, we issued a press release announcing our results of operations for the third quarter ended September 30, 2020. A copy of this press release as well as a copy of our supplemental information package are available on our website and are attached hereto as Exhibits 99.1 and 99.2 and incorporated herein by reference. The information in this Item 2.02 as well as the attached Exhibits 99.1 and 99.2 are being furnished and shall not be deemed “filed” for any purpose, including for the purposes of Section 18 of the Securities and Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that Section, and shall not be deemed incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Exchange Act regardless of any general incorporation language in such filing.
We will host a webcast and conference call at 10:00a.m. Eastern Time on November 2, 2020, to review our third quarter 2020 performance, discuss recent events and conduct a question-and-answer session. The number to call is 1-877-705-6003 (domestic) and 1-201-493-6725 (international). A live webcast will be available in the Investor Relations section of our website. A replay of the conference call will be available through November 16, 2020, by dialing 1-844-512-2921 (domestic) and 1-412-317-6671 (international) and entering the passcode 13710871. Please note that the full text of the press release and supplemental information package are available through our website at ir.easterlyreit.com. The information contained on our website is not incorporated by reference herein.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits:
| Exhibit Number | Description |
|---|---|
| 99.1 | Press Release dated November 2, 2020. |
| 99.2 | Easterly Government Properties, Inc. Supplemental Information Package for the quarter ended September 30, 2020. |
| 104 | Cover Page Interactive Data File (embedded within the inline XBRL document.) |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| EASTERLY GOVERNMENT<br><br><br>PROPERTIES, INC. | |
|---|---|
| By: | /s/ William C. Trimble, III |
| Name: | William C. Trimble, III |
| Title: | Chief Executive Officer and President |
Date: November 2, 2020
dea-ex991_7.htm
| Exhibit 99.1 |
|---|
EASTERLY GOVERNMENT PROPERTIES
REPORTS THIRD QUARTER 2020 RESULTS
~ Easterly Increases its 2020 FFO Guidance for the Second Quarter in a Row ~
WASHINGTON, D.C. – November 2, 2020 – Easterly Government Properties, Inc. (NYSE: DEA) (the “Company” or “Easterly”), a fully integrated real estate investment trust (“REIT”) focused primarily on the acquisition, development and management of Class A commercial properties leased to the U.S. Government, today announced its results of operations for the quarter ended September 30, 2020.
Highlights for the Quarter Ended September 30, 2020:
| • | Net income of $4.8 million, or $0.05 per share on a fully diluted basis |
|---|---|
| • | FFO of $28.3 million, or $0.31 per share on a fully diluted basis |
| --- | --- |
| • | FFO, as Adjusted of $27.2 million, or $0.30 per share on a fully diluted basis |
| --- | --- |
| • | CAD of $23.0 million |
| --- | --- |
| • | Acquired a 76,112-square foot Federal Bureau of Investigation (FBI) field office in Mobile, Alabama (“FBI - Mobile”) |
| --- | --- |
| • | Completed the re-development and commenced a new 20-year lease at the Company’s U.S. Food and Drug Administration (FDA) laboratory in Lenexa, Kansas (“FDA - Lenexa") |
| --- | --- |
| • | Issued 1,475,991 shares of the Company's common stock through the Company's December 2019 ATM Program at a net weighted average price of $22.72 per share, raising net proceeds to the Company of approximately $33.5 million. 951,197 of these shares were issued in settlement of certain forward sales transactions entered into in prior quarters |
| --- | --- |
| • | Expects to receive, as of the date of this release, net proceeds of approximately $116.2 million from the sale of 4,595,873 shares of the Company’s common stock that have not yet been settled under its March 2019 and December 2019 ATM Programs, assuming these forward sales transactions are physically settled in full using a net weighted average initial forward sales price of $25.27 per share |
| --- | --- |
“Easterly is committed to its consistent growth strategy,” said William C. Trimble, III, Easterly’s Chief Executive Officer. “The strength of our acquisition pipeline coupled with our attractive cost of capital and the young age of the Easterly portfolio all contribute to the furtherance of this goal.”
Financial Results for the Nine Months Ended September 30, 2020:
Net income of $10.9 million, or $0.12 per share on a fully diluted basis
FFO of $81.6 million, or $0.93 per share on a fully diluted basis
FFO, as Adjusted of $78.7 million, or $0.90 per share on a fully diluted basis
CAD of $68.2 million
Portfolio Operations
As of September 30, 2020, the Company wholly owned 76 operating properties in the United States encompassing approximately 7.0 million rentable square feet. In addition, the Company wholly owned one property under re-development that the Company expects will encompass approximately 0.2 million rentable square feet upon completion. The re-development project, located in Atlanta, Georgia, is currently in design and, once complete, a 20-year lease with the General Services Administration (GSA) is expected to commence for the beneficial use of the FDA. As of September 30, 2020, the portfolio had a weighted average age of 13.3 years, based upon the date the property was built or renovated-to-suit and had a weighted average remaining lease term of 7.8 years.
Acquisitions and Development Activities
On September 18, 2020, the Company acquired a 76,112-square foot FBI field office in Mobile, Alabama. FBI - Mobile is a three-story office building and single-story vehicle maintenance facility located on a roughly four-acre site that houses the FBI’s Mobile field office, which oversees federal operations across 36 counties through five satellite offices in Auburn, Dothan, Monroeville, Montgomery and Selma. This build-to-suit property was completed in 2001 and is 100% leased to the GSA for the beneficial use of the FBI until December 2029.
On September 25, 2020, the Company commenced a new 20-year lease with the GSA for the beneficial use of the FDA at the Company’s completed re-development project in Lenexa, Kansas. The 59,690-square foot re-development serves as a relocation of the former Kansas City District Laboratory and features a number of upgraded capabilities for the FDA to effectively conduct its mission. The approximately $67 million re-development project achieved substantial completion and lease commencement a quarter earlier than anticipated.
Balance Sheet and Capital Markets Activity
As of September 30, 2020, the Company had total indebtedness of $905.1 million comprised of $100.0 million outstanding on its 2016 term loan facility, $150.0 million outstanding on its 2018 term loan facility, $450.0 million of senior unsecured notes, and $205.1 million of mortgage debt (excluding unamortized premiums and discounts and deferred financing fees). As of September 30, 2020, the Company had no borrowings outstanding on its revolving credit facility. At September 30, 2020, Easterly’s outstanding debt had a weighted average maturity of 7.3 years and a weighted average interest rate of 3.7%. As of September 30, 2020, Easterly’s Net Debt to total enterprise value was 30.4% and its Net Debt to annualized quarterly EBITDA and Adjusted Net Debt to annualized quarterly pro forma EBITDA ratios were 6.1x and 5.6x, respectively.
During the quarter ended September 30, 2020, the Company issued 1,475,991 shares of the Company's common stock through its December 2019 ATM Program at a net weighted average price of $22.72 per share, raising net proceeds to the Company of approximately $33.5 million. 951,197 of these shares were issued in settlement of certain forward sales transactions entered into in prior quarters. During the quarter ended September 30, 2020, the Company also entered into forward sales transactions under its December 2019 ATM Program for the sale of an additional 1,430,223 shares of its common stock that have not yet been settled. Assuming the forward sales transactions are physically settled in full utilizing a net weighted average initial forward sales price of $23.83 per share, the Company expects to receive net proceeds of approximately $34.1 million.
Dividend
On October 27, 2020, the Board of Directors of Easterly approved a cash dividend for the third quarter of 2020 in the amount of $0.26 per common share. The dividend will be payable December 11, 2020 to shareholders of record on November 11, 2020.
Subsequent Events
Subsequent to quarter end, the Company entered into forward sales transactions its December 2019 ATM Program for the sale of an additional 768,418 shares of the Company’s common stock, at a net weighted average initial forward sales price of $22.25 per share, that have not yet been settled.
The Company currently has forward sales transactions under the Company’s March 2019 and December 2019 ATM Programs for the sale of a total of 4,595,873 shares of its common stock that have not yet been settled. Assuming these forward sales transactions are physically settled in full utilizing a net weighted average initial forward sales price of $25.27 per share, the Company expects to receive net proceeds of approximately $116.2 million.
Guidance
Outlook for the 12 Months Ending December 31, 2020
The Company is increasing its guidance for 2020 FFO per share on a fully diluted basis to a range of $1.24 - $1.26.
| Low | High | |||
|---|---|---|---|---|
| Net income (loss) per share – fully diluted basis | $ | 0.16 | 0.18 | |
| Plus: real estate depreciation and amortization | $ | 1.08 | 1.08 | |
| FFO per share – fully diluted basis | $ | 1.24 | 1.26 |
This guidance assumes $200 million of acquisitions and $35 - $45 million of gross development-related investment during 2020.
Outlook for the 12 Months Ending December 31, 2021
The Company is introducing its guidance for 2021 FFO per share on a fully diluted basis in a range of $1.28 - $1.30.
| Low | High | |||
|---|---|---|---|---|
| Net income (loss) per share – fully diluted basis | $ | 0.28 | 0.30 | |
| Plus: real estate depreciation and amortization | $ | 1.00 | 1.00 | |
| FFO per share – fully diluted basis | $ | 1.28 | 1.30 |
This guidance assumes $200 million of acquisitions and $25 million of gross development-related investment during 2021.
This guidance is forward-looking and reflects management's view of current and future market conditions. The Company's actual results may differ materially from this guidance.
Non-GAAP Supplemental Financial Measures
This section contains definitions of certain non-GAAP financial measures and other terms that the Company uses in this press release and, where applicable, the reasons why management believes these non-GAAP financial measures provide useful information to investors about the Company’s financial condition and results of operations and the other purposes for which management uses the measures. These measures should not be considered in isolation or as a substitute for measures of performance in accordance with GAAP. Additional detail can be found in the Company’s most recent annual report on Form 10-K and quarterly report on Form 10-Q, as well as other documents filed with or furnished to the SEC from time to time.
Cash Available for Distribution (CAD) is a non-GAAP financial measure that is not intended to represent cash flow for the period and is not indicative of cash flow provided by operating activities as determined under GAAP. CAD is calculated in accordance with the current Nareit definition as FFO minus normalized recurring real estate-related expenditures and other non-cash items and nonrecurring expenditures. CAD is presented solely as a supplemental disclosure because the Company believes it provides useful information regarding the Company’s ability to fund its dividends. Because all companies do not calculate CAD the same way, the presentation of CAD may not be comparable to similarly titled measures of other companies.
EBITDA is calculated as the sum of net income (loss) before interest expense, taxes, depreciation and amortization. EBITDA is not intended to represent cash flow for the period, is not presented as an alternative to operating income as an indicator of operating performance, should not be considered in isolation or as a substitute for measures of performance prepared in accordance with GAAP, is not indicative of operating income or cash provided by operating activities as determined under GAAP and may be presented on a pro forma basis. EBITDA is presented solely as a supplemental disclosure with respect to liquidity because the Company believes it provides useful information regarding the Company's ability to service or incur debt. Because all companies do not calculate EBITDA the same way, the presentation of EBITDA may not be comparable to similarly titled measures of other companies.
Funds From Operations (FFO) is defined, in accordance with the Nareit FFO White Paper - 2018 Restatement, as net income (loss), calculated in accordance with GAAP, excluding depreciation and amortization related to real estate, gains and losses from the sale of certain real estate assets, gains and losses from change in control and impairment write-downs of certain real estate assets and investments in entities when the impairment is directly attributable to decreases in the value of depreciable real estate held by the entity. FFO is a widely recognized measure of REIT performance. Although FFO is a non-GAAP financial measure, the Company believes that information regarding FFO is helpful to shareholders and potential investors.
Funds From Operations, as Adjusted (FFO, as Adjusted) adjusts FFO to present an alternative measure of the Company’s operating performance, which, when applicable, excludes the impact of acquisition costs, straight-line rent, amortization of above-/below-market leases, amortization of deferred revenue (which results from landlord assets funded by tenants), non-cash interest expense, non-cash compensation and other non-cash items. By excluding these income and expense items from FFO, as Adjusted, the Company believes it provides useful information as these items have no cash impact. In addition, by excluding acquisition related costs the Company believes FFO, as Adjusted provides useful information that is comparable across periods and more accurately reflects the operating performance of the Company’s properties. Certain prior year amounts have been updated to conform to the current year FFO, as Adjusted definition.
Net Debt and Adjusted Net Debt. Net Debt represents consolidated debt (reported in accordance with GAAP) adjusted to exclude unamortized premiums and discounts and deferred financing fees, less cash and cash equivalents. By excluding these items, the result provides an estimate of the contractual amount of borrowed
capital to be repaid, net of cash available to repay it. The Company believes this calculation constitutes a beneficial supplemental non-GAAP financial disclosure to investors in understanding its financial condition. Adjusted Net Debt is Net Debt reduced by 1) for each project under construction or in design, the lesser of i) outstanding lump-sum reimbursement amounts and ii) the cost to date, 2) 40% times the amount by which the cost to date exceeds total lump-sum reimbursement amounts for each project under construction or in design and 3) outstanding lump-sum reimbursement amounts for projects previously completed. These adjustments are made to 1) remove the estimated portion of each project under construction, in design or previously completed that has been financed with debt which may be repaid with outstanding cost reimbursement payments from the US Government and 2) remove the estimated portion of each project under construction or in design, in excess of total lump-sum reimbursements, that has been financed with debt but has not yet produced earnings. See page 20 of the Company’s Q3 2020 Supplemental Information Package for further information. The Company's method of calculating Net Debt and Adjusted Net Debt may be different from methods used by other REITs and, accordingly, may not be comparable to such other REITs.
Other Definitions
Fully diluted basis assumes the exchange of all outstanding common units representing limited partnership interests in the Company’s operating partnership, the full vesting of all shares of restricted stock, and the exchange of all earned and vested LTIP units in the Company’s operating partnership for shares of common stock on a one-for-one basis, which is not the same as the meaning of “fully diluted” under GAAP.
Conference Call Information
The Company will host a webcast and conference call at 10:00 a.m. Eastern time on November 2, 2020 to review the third quarter 2020 performance, discuss recent events and conduct a question-and-answer session. The number to call is 1-877-705-6003 (domestic) and 1-201-493-6725 (international). A live webcast will be available in the Investor Relations section of the Company’s website. A replay of the conference call will be available through November 16, 2020 by dialing 844-512-2921 (domestic) and 1-412-317-6671 (international) and entering the passcode 13710871. Please note that the full text of the press release and supplemental information package are available through the Company’s website at ir.easterlyreit.com.
About Easterly Government Properties, Inc.
Easterly Government Properties, Inc. (NYSE:DEA) is based in Washington, D.C., and focuses primarily on the acquisition, development and management of Class A commercial properties that are leased to the U.S. Government. Easterly’s experienced management team brings specialized insight into the strategy and needs of mission-critical U.S. Government agencies for properties leased to such agencies either directly or through the U.S. General Services Administration (GSA). For further information on the company and its properties, please visit www.easterlyreit.com.
Contact:
Easterly Government Properties, Inc.
Lindsay S. Winterhalter
Vice President, Investor Relations & Operations
202-596-3947
ir@easterlyreit.com
Forward Looking Statements
We make statements in this press release that are considered “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, or the Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act, which are usually identified by the use of words such as “anticipates,” “believes,” “estimates,” “expects,” “intends,” “may,” “plans,” “projects,” “seeks,” “should,” “will,” and variations of such words or similar expressions and include our guidance with respect to Net income (loss) and FFO per share on a fully diluted basis. We intend these forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995 and are including this statement in this press release for purposes of complying with those safe harbor provisions. These forward-looking statements reflect our current views about our plans, intentions, expectations, strategies and prospects, which are based on the information currently available to us and on assumptions we have made. Although we believe that our plans, intentions, expectations, strategies and prospects as reflected in or suggested by those forward-looking statements are reasonable, we can give no assurance that the plans, intentions, expectations or strategies 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 that are beyond our control including, without limitation: risks associated with our dependence on the U.S. Government and its agencies for substantially all of our revenues; risks associated with ownership and development of real estate; the risk of decreased rental rates or increased vacancy rates; loss of key personnel; the continuing adverse impact of the novel coronavirus (COVID-19) on the U.S., regional and global economies and on our financial condition and results of operations; general volatility of the capital and credit markets and the market price of our common stock; the risk we may lose one or more major tenants; difficulties in completing and successfully integrating acquisitions; failure of acquisitions or development projects to occur at anticipated levels or to yield anticipated results; risks associated with actual or threatened terrorist attacks; intense competition in the real estate market that may limit our ability to attract or retain tenants or re-lease space; insufficient amounts of insurance or exposure to events that are either uninsured or underinsured; uncertainties and risks related to adverse weather conditions, natural disasters and climate change; exposure to liability relating to environmental and health and safety matters; limited ability to dispose of assets because of the relative illiquidity of real estate investments and the nature of our assets; exposure to litigation or other claims; risks associated with breaches of our data security; risks associated with our indebtedness; and other risks and uncertainties detailed in the “Risk Factors” section of our Form 10-K for the year ended December 31, 2019, filed with the Securities and Exchange Commission on February 25, 2020 and our Form 10-Q for the quarter ended September 30, 2020, to be filed with the Securities and Exchange Commission on or about November 2, 2020 and under the heading “Risk Factors” in our other public filings. In addition, our anticipated qualification as a real estate investment trust involves the application of highly technical and complex provisions of the Internal Revenue Code of 1986, or the Code, and depends on our ability to meet the various requirements imposed by the Code through actual operating results, distribution levels and diversity of stock ownership. We assume no obligation to update publicly any forward looking statements, whether as a result of new information, future events or otherwise.
Balance Sheet
(Unaudited, in thousands, except share amounts)
| December 31, 2019 | |||||
|---|---|---|---|---|---|
| Assets | |||||
| Real estate properties, net | 2,130,984 | $ | 1,988,726 | ||
| Cash and cash equivalents | 9,037 | 12,012 | |||
| Restricted cash | 4,837 | 3,537 | |||
| Deposits on acquisitions | 1,550 | 1,800 | |||
| Rents receivable | 49,158 | 27,788 | |||
| Accounts receivable | 13,580 | 15,820 | |||
| Deferred financing, net | 1,216 | 1,749 | |||
| Intangible assets, net | 162,576 | 168,625 | |||
| Interest rate swaps | - | 541 | |||
| Prepaid expenses and other assets | 23,654 | 13,991 | |||
| Total assets | 2,396,592 | $ | 2,234,589 | ||
| Liabilities | |||||
| Term loan facilities, net | 248,875 | 248,602 | |||
| Notes payable, net | 447,109 | 446,927 | |||
| Mortgage notes payable, net | 203,768 | 206,312 | |||
| Intangible liabilities, net | 27,225 | 24,578 | |||
| Deferred revenue | 94,175 | 54,659 | |||
| Interest rate swaps | 14,176 | 5,837 | |||
| Accounts payable, accrued expenses, and other liabilities | 61,109 | 47,833 | |||
| Total liabilities | 1,096,437 | 1,034,748 | |||
| Equity | |||||
| Common stock, par value 0.01, 200,000,000 shares authorized, | |||||
| 81,220,115 and 74,832,292 shares issued and outstanding at<br>September 30, 2020 and December 31, 2019, respectively. | 812 | 748 | |||
| Additional paid-in capital | 1,405,513 | 1,257,319 | |||
| Retained earnings | 29,631 | 20,004 | |||
| Cumulative dividends | (270,531 | ) | (210,760 | ) | |
| Accumulated other comprehensive loss | (12,570 | ) | (4,690 | ) | |
| Total stockholders' equity | 1,152,855 | 1,062,621 | |||
| Non-controlling interest in Operating Partnership | 147,300 | 137,220 | |||
| Total equity | 1,300,155 | 1,199,841 | |||
| Total liabilities and equity | 2,396,592 | $ | 2,234,589 |
All values are in US Dollars.
Income Statement
(Unaudited, in thousands, except share and per share amounts)
| Three Months Ended | Nine Months Ended | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| September 30, 2020 | September 30, 2019 | September 30, 2020 | September 30, 2019 | |||||||||
| Revenues | ||||||||||||
| Rental income | $ | 59,843 | $ | 53,382 | $ | 175,976 | $ | 152,383 | ||||
| Tenant reimbursements | 682 | 3,369 | 2,269 | 6,608 | ||||||||
| Other income | 606 | 838 | 1,630 | 1,954 | ||||||||
| Total revenues | 61,131 | 57,589 | 179,875 | 160,945 | ||||||||
| Expenses | ||||||||||||
| Property operating | 12,313 | 13,408 | 34,486 | 34,305 | ||||||||
| Real estate taxes | 6,803 | 6,008 | 19,982 | 17,228 | ||||||||
| Depreciation and amortization | 23,522 | 23,299 | 70,732 | 68,717 | ||||||||
| Acquisition costs | 467 | 519 | 1,673 | 1,441 | ||||||||
| Corporate general and administrative | 4,577 | 5,298 | 15,565 | 14,282 | ||||||||
| Total expenses | 47,682 | 48,532 | 142,438 | 135,973 | ||||||||
| Other income (expense) | ||||||||||||
| Interest expense, net | (8,628 | ) | (8,454 | ) | (26,535 | ) | (24,604 | ) | ||||
| Gain on the sale of operating property | - | - | - | 6,245 | ||||||||
| Net income | 4,821 | 603 | 10,902 | 6,613 | ||||||||
| Non-controlling interest in Operating Partnership | (557 | ) | (54 | ) | (1,275 | ) | (838 | ) | ||||
| Net income available to Easterly Government | ||||||||||||
| Properties, Inc. | $ | 4,264 | $ | 549 | $ | 9,627 | $ | 5,775 | ||||
| Net income available to Easterly Government | ||||||||||||
| Properties, Inc. per share: | ||||||||||||
| Basic | $ | 0.05 | $ | 0.01 | $ | 0.12 | $ | 0.08 | ||||
| Diluted | $ | 0.05 | $ | 0.01 | $ | 0.12 | $ | 0.08 | ||||
| Weighted-average common shares outstanding: | ||||||||||||
| Basic | 80,334,976 | 71,444,448 | 77,144,791 | 67,010,162 | ||||||||
| Diluted | 80,928,844 | 71,828,991 | 77,745,370 | 67,332,670 | ||||||||
| Net income, per share - fully diluted basis | $ | 0.05 | $ | 0.01 | $ | 0.12 | $ | 0.09 | ||||
| Weighted average common shares outstanding - | ||||||||||||
| fully diluted basis | 90,843,542 | 81,337,275 | 87,460,854 | 76,837,357 |
EBITDA, FFO and CAD
(Unaudited, in thousands, except share and per share amounts)
| Three Months Ended | Nine Months Ended | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| September 30, 2020 | September 30, 2019 | September 30, 2020 | September 30, 2019 | |||||||||
| Net income | $ | 4,821 | $ | 603 | $ | 10,902 | $ | 6,613 | ||||
| Depreciation and amortization | 23,522 | 23,299 | 70,732 | 68,717 | ||||||||
| Interest expense | 8,628 | 8,454 | 26,535 | 24,604 | ||||||||
| Tax expense | 39 | 173 | 305 | 426 | ||||||||
| Gain on the sale of operating property | - | - | - | (6,245 | ) | |||||||
| EBITDA | $ | 37,010 | $ | 32,529 | $ | 108,474 | $ | 94,115 | ||||
| Pro forma adjustments^(1)^ | 1,709 | |||||||||||
| Pro forma EBITDA | $ | 38,719 | ||||||||||
| Net income | $ | 4,821 | $ | 603 | $ | 10,902 | $ | 6,613 | ||||
| Depreciation and amortization | 23,522 | 23,299 | 70,732 | 68,717 | ||||||||
| Gain on the sale of operating property | - | - | - | (6,245 | ) | |||||||
| FFO | $ | 28,343 | $ | 23,902 | $ | 81,634 | $ | 69,085 | ||||
| Adjustments to FFO: | ||||||||||||
| Acquisition costs | 467 | 519 | 1,673 | 1,441 | ||||||||
| Straight-line rent and other non-cash adjustments | (777 | ) | (110 | ) | (2,106 | ) | (1,676 | ) | ||||
| Amortization of above-/below-market leases | (1,451 | ) | (1,517 | ) | (4,499 | ) | (4,761 | ) | ||||
| Amortization of deferred revenue | (744 | ) | (176 | ) | (2,138 | ) | (310 | ) | ||||
| Non-cash interest expense | 360 | 330 | 1,078 | 975 | ||||||||
| Non-cash compensation | 1,035 | 714 | 3,056 | 2,145 | ||||||||
| FFO, as Adjusted | $ | 27,233 | $ | 23,662 | $ | 78,698 | $ | 66,899 | ||||
| FFO, per share - fully diluted basis | $ | 0.31 | $ | 0.29 | $ | 0.93 | $ | 0.90 | ||||
| FFO, as Adjusted, per share - fully diluted basis | $ | 0.30 | $ | 0.29 | $ | 0.90 | $ | 0.87 | ||||
| FFO, as Adjusted | $ | 27,233 | $ | 23,662 | $ | 78,698 | $ | 66,899 | ||||
| Acquisition costs | (467 | ) | (519 | ) | (1,673 | ) | (1,441 | ) | ||||
| Principal amortization | (887 | ) | (852 | ) | (2,635 | ) | (2,530 | ) | ||||
| Maintenance capital expenditures | (2,361 | ) | (814 | ) | (4,884 | ) | (3,054 | ) | ||||
| Contractual tenant improvements | (550 | ) | (753 | ) | (1,308 | ) | (941 | ) | ||||
| Cash Available for Distribution (CAD) | $ | 22,968 | $ | 20,724 | $ | 68,198 | $ | 58,933 | ||||
| Weighted average common shares outstanding - | ||||||||||||
| fully diluted basis | 90,843,542 | 81,337,275 | 87,460,854 | 76,837,357 |
^1^ Pro forma assuming a full quarter of operations from the two properties and one parcel of land acquired or placed in service in the third quarter of 2020.
Net Debt and Adjusted Net Debt
(Unaudited, in thousands)
| September 30, 2020 | |||
|---|---|---|---|
| Total Debt^(1)^ | $ | 905,119 | |
| Less: cash and cash equivalents | (9,037 | ) | |
| Net Debt | $ | 896,082 | |
| Less: adjustment for development projects^(2)^ | (32,044 | ) | |
| Adjusted Net Debt | $ | 864,038 |
^1^ Excludes unamortized premiums / discounts and deferred financing fees.
^2^ See definition of Adjusted Net Debt on Page 5.
dea-ex992_6.htm
Exhibit 99.2
| Disclaimers |
|---|
Forward-looking Statement
We make statements in this Supplemental Information Package that are considered “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, or the Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act, which are usually identified by the use of words such as “anticipates,” “believes,” “estimates,” “expects,” “intends,” “may,” “plans,” “projects,” “seeks,” “should,” “will,” and variations of such words or similar expressions. We intend these forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995 and are including this statement in this Supplemental Information Package for purposes of complying with those safe harbor provisions. These forward-looking statements reflect our current views about our plans, intentions, expectations, strategies and prospects, which are based on the information currently available to us and on assumptions we have made. Although we believe that our plans, intentions, expectations, strategies and prospects as reflected in or suggested by those forward-looking statements are reasonable, we can give no assurance that the plans, intentions, expectations or strategies 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 that are beyond our control including, without limitation: risks associated with our dependence on the U.S. Government and its agencies for substantially all of our revenues; risks associated with ownership and development of real estate; the risk of decreased rental rates or increased vacancy rates; loss of key personnel; the continuing adverse impact of the novel coronavirus (COVID-19) on the U.S., regional and global economies and the financial condition and results of operations of the Company; general volatility of the capital and credit markets and the market price of our common stock; the risk we may lose one or more major tenants; difficulties in completing and successfully integrating acquisitions; failure of acquisitions or development projects to occur at anticipated levels or to yield anticipated results; risks associated with actual or threatened terrorist attacks; intense competition in the real estate market that may limit our ability to attract or retain tenants or re-lease space; insufficient amounts of insurance or exposure to events that are either uninsured or underinsured; uncertainties and risks related to adverse weather conditions, natural disasters and climate change; exposure to liability relating to environmental and health and safety matters; limited ability to dispose of assets because of the relative illiquidity of real estate investments and the nature of our assets; exposure to litigation or other claims; risks associated with breaches of our data security; risks associated with our indebtedness; and other risks and uncertainties detailed in the “Risk Factors” section of our Form 10-K for the year ended December 31, 2019, filed with the Securities and Exchange Commission, or the SEC, on February 25, 2020 and our Form 10-Q for the quarter ended September 30, 2020, to be filed with the SEC on or about November 2, 2020 and the factors included under the heading “Risk Factors” in our other public filings. In addition, our qualification as a real estate investment trust involves the application of highly technical and complex provisions of the Internal Revenue Code of 1986, or the Code, and depends on our ability to meet the various requirements imposed by the Code through actual operating results, distribution levels and diversity of stock ownership. We assume no obligation to update publicly any forward-looking statements, whether as a result of new information, future events or otherwise.
Ratings
Ratings are not recommendations to buy, sell or hold the Company’s securities.
The following discussion related to the consolidated financial statements of the Company should be read in conjunction with the financial statements for the quarter ended September 30, 2020 that will be released on Form 10-Q to be filed on or about November 2, 2020.
| Supplemental Definitions |
|---|
This section contains definitions of certain non-GAAP financial measures and other terms that the Company uses in this Supplemental Information Package and, where applicable, the reasons why management believes these non-GAAP financial measures provide useful information to investors about the Company’s financial condition and results of operations and the other purposes for which management uses the measures. These measures should not be considered in isolation or as a substitute for measures of performance in accordance with GAAP. Additional detail can be found in the Company’s most recent quarterly report on Form 10-Q and the Company’s most recent annual report on Form 10-K, as well as other documents filed with or furnished to the SEC from time to time.
Annualized lease income is defined as the annualized contractual base rent for the last month in a specified period, plus the annualized straight-line rent adjustments for the last month in such period and the annualized net expense reimbursements earned by us for the last month in such period.
Cash Available for Distribution (CAD) is a non-GAAP financial measure that is not intended to represent cash flow for the period and is not indicative of cash flow provided by operating activities as determined under GAAP. CAD is calculated in accordance with the current Nareit definition as FFO minus normalized recurring real estate-related expenditures and other non-cash items and nonrecurring expenditures. CAD is presented solely as a supplemental disclosure because the Company believes it provides useful information regarding the Company’s ability to fund its dividends. Because all companies do not calculate CAD the same way, the presentation of CAD may not be comparable to similarly titled measures of other companies.
Cash fixed charge coverage ratio is calculated as EBITDA divided by the sum of principal amortization and interest expense, excluding amortization of premiums / discounts and deferred financing fees, for the most recent quarter.
Cash interest coverage ratio is calculated as EBITDA divided by interest expense, excluding amortization of premiums / discounts and deferred financing fees, for the most recent quarter.
EBITDA is calculated as the sum of net income (loss) before interest expense, taxes, depreciation and amortization. EBITDA is not intended to represent cash flow for the period, is not presented as an alternative to operating income as an indicator of operating performance, should not be considered in isolation or as a substitute for measures of performance prepared in accordance with GAAP, is not indicative of operating income or cash provided by operating activities as determined under GAAP and may be presented on a pro forma basis. EBITDA is presented solely as a supplemental disclosure with respect to liquidity because the Company believes it provides useful information regarding the Company's ability to service or incur debt. Because all companies do not calculate EBITDA the same way, the presentation of EBITDA may not be comparable to similarly titled measures of other companies.
Fully diluted basis assumes the exchange of all outstanding common units representing limited partnership interests in the Company’s operating partnership, or common units, the full vesting of all shares of restricted stock, and the exchange of all earned and vested LTIP units in the Company’s operating partnership for shares of common stock on a one-for-one basis, which is not the same as the meaning of “fully diluted” under GAAP.
Funds From Operations (FFO) is defined, in accordance with the Nareit FFO White Paper - 2018 Restatement, as net income (loss), calculated in accordance with GAAP, excluding depreciation and amortization related to real estate, gains and losses from the sale of certain real estate assets, gains and losses from change in control and impairment write-downs of certain real estate assets and investments in entities when the impairment is directly attributable to decreases in the value of depreciable real estate held by the entity. FFO is a widely recognized measure of REIT performance. Although FFO is a non-GAAP financial measure, the Company believes that information regarding FFO is helpful to shareholders and potential investors.
Funds From Operations, as Adjusted (FFO, as Adjusted) adjusts FFO to present an alternative measure of our operating performance, which, when applicable, excludes the impact of acquisition costs, straight-line rent, amortization of above-/below-market leases, amortization of deferred revenue (which results from landlord assets funded by tenants), non-cash interest expense, non-cash compensation and other non-cash items. By excluding these income and expense items from FFO, as Adjusted, the Company believes it provides useful information as these items have no cash impact. In addition, by excluding acquisition
| Supplemental Definitions |
|---|
related costs the Company believes FFO, as Adjusted provides useful information that is comparable across periods and more accurately reflects the operating performance of the Company’s properties. Certain prior year amounts have been updated to conform to the current year FFO, as Adjusted definition.
Net Operating Income (NOI) and Cash NOI. NOI is calculated as net income adjusted to exclude depreciation and amortization, acquisition costs, corporate general and administrative costs, interest expense and gains or losses from sales of property. Cash NOI excludes from NOI straight-line rent, amortization of above-/below-market leases, and amortization of deferred revenue (which results from landlord assets funded by tenants). NOI and Cash NOI presented by the Company may not be comparable to NOI and Cash NOI reported by other REITs that define NOI and Cash NOI differently. The Company believes that NOI and Cash NOI provide investors with useful measures of the operating performance of our properties. NOI and Cash NOI should not be considered an alternative to net income as an indication of our performance or to cash flows as a measure of the Company's liquidity or its ability to make distributions. Certain prior year amounts have been updated to conform to the current year Cash NOI definition.
Net Debt and Adjusted Net Debt. Net Debt represents consolidated debt (reported in accordance with GAAP) adjusted to exclude unamortized premiums and discounts and deferred financing fees, less cash and cash equivalents. By excluding these items, the result provides an estimate of the contractual amount of borrowed capital to be repaid, net of cash available to repay it. The Company believes this calculation constitutes a beneficial supplemental non-GAAP financial disclosure to investors in understanding its financial condition. Adjusted Net Debt is Net Debt reduced by 1) for each project under construction or in design, the lesser of i) outstanding lump-sum reimbursement amounts and ii) the cost to date, 2) 40% times the amount by which the cost to date exceeds total lump-sum reimbursement amounts for each project under construction or in design and 3) outstanding lump-sum reimbursement amounts for projects previously completed. These adjustments are made to 1) remove the estimated portion of each project under construction, in design or previously completed that has been financed with debt which may be repaid with outstanding cost reimbursement payments from the US Government and 2) remove the estimated portion of each project under construction or in design, in excess of total lump-sum reimbursements, that has been financed with debt but has not yet produced earnings. See page 20 for further information. The Company’s method of calculating Net Debt and Adjusted Net Debt may be different from methods used by other REITs and, accordingly, may not be comparable to such other REITs.
| Table of Contents | |||
|---|---|---|---|
| Overview | |||
| --- | --- | ||
| Corporate Information and Analyst Coverage | 6 | ||
| Executive Summary | 7 | ||
| Corporate Financials | |||
| Balance Sheets | 8 | ||
| Income Statements | 9 | ||
| Net Operating Income | 10 | ||
| EBITDA, FFO and CAD | 11 | ||
| Debt | |||
| Debt Schedules | 12 | ||
| Debt Maturities | 13 | ||
| Properties | |||
| Leased Operating Property Overview | 14 | ||
| Tenants | 17 | ||
| Lease Expirations | 19 | ||
| Summary of Re/Development Projects | 20 | ||
| Corporate Information and Analyst Coverage | |||
| --- | |||
| Corporate Information | |||
| --- | --- | --- | --- |
| Corporate Headquarters | Stock Exchange Listing | Information Requests | Investor Relations |
| 2101 L Street NW | New York Stock Exchange | Please contact ir@easterlyreit.com | Lindsay Winterhalter, |
| Suite 650 | or 202-596-3947 to request an | VP, Investor Relations | |
| Washington, DC 20037 | Ticker | Investor Relations package | & Operations |
| 202-595-9500 | DEA | ||
| Executive Team | Board of Directors | ||
| --- | --- | --- | --- |
| William Trimble III, CEO | Darrell Crate, Chairman | William Binnie, Lead Independent Director | Emil Henry Jr. |
| Michael Ibe, Vice-Chairman and EVP | Meghan Baivier, CFO & COO | Darrell Crate | Michael Ibe |
| Alison Bernard, CAO | Ronald Kendall, EVP | Cynthia Fisher | Tara Innes |
| Andrew Pulliam, EVP | Scott Freeman | William Trimble III | |
| Equity Research Coverage | |||
| --- | --- | --- | |
| Citigroup | Raymond James & Associates | RBC Capital Markets | |
| Michael Bilerman / Emmanuel Korchman | Bill Crow / Paul Puryear | Michael Carroll | |
| 212-816-1383 / 212-816-1382 | 727-567-2594 / 727-567-2253 | 440-715-2649 | |
| Jefferies | Truist Securities | Compass Point Research & Trading, LLC | |
| Jonathan Petersen / Peter Abramowitz | Michael R. Lewis | Merrill Ross | |
| 212-284-1705 / 212-336-7241 | 212-319-5659 | 202-534-1392 |
Any opinions, estimates, forecasts or predictions regarding Easterly Government Properties, Inc.’s performance made by these analysts are theirs alone and do not represent opinions, estimates, forecasts or predictions of Easterly Government Properties, Inc. or its management. Easterly Government Properties, Inc. does not by its reference above or distribution imply its endorsement of or concurrence with such opinions, estimates, forecasts or predictions.
| Executive Summary<br><br><br>(In thousands, except share and per share amounts) | |||||||
|---|---|---|---|---|---|---|---|
| Outstanding Classes of Stock and Partnership Units - Fully Diluted Basis | At September 30, 2020 | Earnings | Three months ended<br><br><br>September 30, 2019 | ||||
| --- | --- | --- | --- | --- | --- | --- | --- |
| Common shares | 81,130,224 | Net income available to Easterly Government Properties, Inc. | 4,264 | $ | 549 | ||
| Unvested restricted shares | 89,891 | Net income available to Easterly Government Properties, Inc. | |||||
| Common partnership and vested LTIP units | 10,377,466 | per share: | |||||
| Total - fully diluted basis | 91,597,581 | Basic | 0.05 | $ | 0.01 | ||
| Diluted | 0.05 | $ | 0.01 | ||||
| Market Capitalization | At September 30, 2020 | Net income | 4,821 | $ | 603 | ||
| Price of Common Shares | $ | 22.41 | Net income, per share - fully diluted basis | 0.05 | $ | 0.01 | |
| Total equity market capitalization - fully diluted basis | $ | 2,052,702 | Funds From Operations (FFO) | 28,343 | $ | 23,902 | |
| Net Debt | 896,082 | FFO, per share - fully diluted basis | 0.31 | $ | 0.29 | ||
| Total enterprise value | $ | 2,948,784 | |||||
| FFO, as Adjusted | 27,233 | $ | 23,662 | ||||
| FFO, as Adjusted, per share - fully diluted basis | 0.30 | $ | 0.29 | ||||
| Ratios | At September 30, 2020 | ||||||
| Net debt to total enterprise value | 30.4 | % | Cash Available for Distribution (CAD) | 22,968 | $ | 20,724 | |
| Net debt to annualized quarterly EBITDA | 6.1 | x | |||||
| Adjusted Net Debt to annualized quarterly pro | Liquidity | At September 30, 2020 | |||||
| forma EBITDA | 5.6 | x | Cash and cash equivalents | $ | 9,037 | ||
| Cash interest coverage ratio | 4.5 | x | |||||
| Cash fixed charge coverage ratio | 4.0 | x | Available under 450 million unsecured revolving credit facility(1) | $ | 450,000 |
All values are in US Dollars.
^(1)^Revolving credit facility has an accordion feature that provides additional capacity, subject to the satisfaction of customary terms and conditions, of up to $250 million, for a total revolving credit facility size of not more than $700 million.
| Balance Sheets<br><br><br>(Unaudited, in thousands, except share amounts) | |||||
|---|---|---|---|---|---|
| December 31, 2019 | |||||
| --- | --- | --- | --- | --- | --- |
| Assets | |||||
| Real estate properties, net | 2,130,984 | $ | 1,988,726 | ||
| Cash and cash equivalents | 9,037 | 12,012 | |||
| Restricted cash | 4,837 | 3,537 | |||
| Deposits on acquisitions | 1,550 | 1,800 | |||
| Rents receivable | 49,158 | 27,788 | |||
| Accounts receivable | 13,580 | 15,820 | |||
| Deferred financing, net | 1,216 | 1,749 | |||
| Intangible assets, net | 162,576 | 168,625 | |||
| Interest rate swaps | - | 541 | |||
| Prepaid expenses and other assets | 23,654 | 13,991 | |||
| Total assets | 2,396,592 | $ | 2,234,589 | ||
| Liabilities | |||||
| Term loan facilities, net | 248,875 | 248,602 | |||
| Notes payable, net | 447,109 | 446,927 | |||
| Mortgage notes payable, net | 203,768 | 206,312 | |||
| Intangible liabilities, net | 27,225 | 24,578 | |||
| Deferred revenue | 94,175 | 54,659 | |||
| Interest rate swaps | 14,176 | 5,837 | |||
| Accounts payable, accrued expenses, and other liabilities | 61,109 | 47,833 | |||
| Total liabilities | 1,096,437 | 1,034,748 | |||
| Equity | |||||
| Common stock, par value 0.01, 200,000,000 shares authorized, | |||||
| 81,220,115 and 74,832,292 shares issued and outstanding at<br>September 30, 2020 and December 31, 2019, respectively. | 812 | 748 | |||
| Additional paid-in capital | 1,405,513 | 1,257,319 | |||
| Retained earnings | 29,631 | 20,004 | |||
| Cumulative dividends | (270,531 | ) | (210,760 | ) | |
| Accumulated other comprehensive loss | (12,570 | ) | (4,690 | ) | |
| Total stockholders' equity | 1,152,855 | 1,062,621 | |||
| Non-controlling interest in Operating Partnership | 147,300 | 137,220 | |||
| Total equity | 1,300,155 | 1,199,841 | |||
| Total liabilities and equity | 2,396,592 | $ | 2,234,589 |
All values are in US Dollars.
| Income Statements<br><br><br>(Unaudited, in thousands, except share and per share amounts) |
|---|
^^
| Three Months Ended | Nine Months Ended | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| September 30, 2020 | September 30, 2019 | September 30, 2020 | September 30, 2019 | |||||||||
| Revenues | ||||||||||||
| Rental income | $ | 59,843 | $ | 53,382 | $ | 175,976 | $ | 152,383 | ||||
| Tenant reimbursements | 682 | 3,369 | 2,269 | 6,608 | ||||||||
| Other income | 606 | 838 | 1,630 | 1,954 | ||||||||
| Total revenues | 61,131 | 57,589 | 179,875 | 160,945 | ||||||||
| Expenses | ||||||||||||
| Property operating | 12,313 | 13,408 | 34,486 | 34,305 | ||||||||
| Real estate taxes | 6,803 | 6,008 | 19,982 | 17,228 | ||||||||
| Depreciation and amortization | 23,522 | 23,299 | 70,732 | 68,717 | ||||||||
| Acquisition costs | 467 | 519 | 1,673 | 1,441 | ||||||||
| Corporate general and administrative | 4,577 | 5,298 | 15,565 | 14,282 | ||||||||
| Total expenses | 47,682 | 48,532 | 142,438 | 135,973 | ||||||||
| Other income (expense) | ||||||||||||
| Interest expense, net | (8,628 | ) | (8,454 | ) | (26,535 | ) | (24,604 | ) | ||||
| Gain on the sale of operating property | - | - | - | 6,245 | ||||||||
| Net income | 4,821 | 603 | 10,902 | 6,613 | ||||||||
| Non-controlling interest in Operating Partnership | (557 | ) | (54 | ) | (1,275 | ) | (838 | ) | ||||
| Net income available to Easterly Government | ||||||||||||
| Properties, Inc. | $ | 4,264 | $ | 549 | $ | 9,627 | $ | 5,775 | ||||
| Net income available to Easterly Government | ||||||||||||
| Properties, Inc. per share: | ||||||||||||
| Basic | $ | 0.05 | $ | 0.01 | $ | 0.12 | $ | 0.08 | ||||
| Diluted | $ | 0.05 | $ | 0.01 | $ | 0.12 | $ | 0.08 | ||||
| Weighted-average common shares outstanding: | ||||||||||||
| Basic | 80,334,976 | 71,444,448 | 77,144,791 | 67,010,162 | ||||||||
| Diluted | 80,928,844 | 71,828,991 | 77,745,370 | 67,332,670 | ||||||||
| Net income, per share - fully diluted basis | $ | 0.05 | $ | 0.01 | $ | 0.12 | $ | 0.09 | ||||
| Weighted average common shares outstanding - | ||||||||||||
| fully diluted basis | 90,843,542 | 81,337,275 | 87,460,854 | 76,837,357 | ||||||||
| Net Operating Income<br><br><br>(Unaudited, in thousands) | ||||||||||||
| --- | ||||||||||||
| Three Months Ended | Nine Months Ended | |||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| September 30, 2020 | September 30, 2019 | September 30, 2020 | September 30, 2019 | |||||||||
| Net income | $ | 4,821 | $ | 603 | $ | 10,902 | $ | 6,613 | ||||
| Depreciation and amortization | 23,522 | 23,299 | 70,732 | 68,717 | ||||||||
| Acquisition costs | 467 | 519 | 1,673 | 1,441 | ||||||||
| Corporate general and administrative | 4,577 | 5,298 | 15,565 | 14,282 | ||||||||
| Interest expense | 8,628 | 8,454 | 26,535 | 24,604 | ||||||||
| Gain on the sale of operating property | - | - | - | (6,245 | ) | |||||||
| Net Operating Income | 42,015 | 38,173 | 125,407 | 109,412 | ||||||||
| Adjustments to Net Operating Income: | ||||||||||||
| Straight-line rent and other non-cash adjustments | (761 | ) | (99 | ) | (2,065 | ) | (1,649 | ) | ||||
| Amortization of above-/below-market leases | (1,451 | ) | (1,517 | ) | (4,499 | ) | (4,761 | ) | ||||
| Amortization of deferred revenue | (744 | ) | (176 | ) | (2,138 | ) | (310 | ) | ||||
| Cash Net Operating Income | $ | 39,059 | $ | 36,381 | $ | 116,705 | $ | 102,692 | ||||
| EBITDA, FFO and CAD<br><br><br>(Unaudited, in thousands, except share and per share amounts) | ||||||||||||
| --- | ||||||||||||
| Three Months Ended | Nine Months Ended | |||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| September 30, 2020 | September 30, 2019 | September 30, 2020 | September 30, 2019 | |||||||||
| Net income | $ | 4,821 | $ | 603 | $ | 10,902 | $ | 6,613 | ||||
| Depreciation and amortization | 23,522 | 23,299 | 70,732 | 68,717 | ||||||||
| Interest expense | 8,628 | 8,454 | 26,535 | 24,604 | ||||||||
| Tax expense | 39 | 173 | 305 | 426 | ||||||||
| Gain on the sale of operating property | - | - | - | (6,245 | ) | |||||||
| EBITDA | $ | 37,010 | $ | 32,529 | $ | 108,474 | $ | 94,115 | ||||
| Pro forma adjustments^(1)^ | 1,709 | |||||||||||
| Pro forma EBITDA | $ | 38,719 | ||||||||||
| Net income | $ | 4,821 | $ | 603 | $ | 10,902 | $ | 6,613 | ||||
| Depreciation and amortization | 23,522 | 23,299 | 70,732 | 68,717 | ||||||||
| Gain on the sale of operating property | - | - | - | (6,245 | ) | |||||||
| FFO | $ | 28,343 | $ | 23,902 | $ | 81,634 | $ | 69,085 | ||||
| Adjustments to FFO: | ||||||||||||
| Acquisition costs | 467 | 519 | 1,673 | 1,441 | ||||||||
| Straight-line rent and other non-cash adjustments | (777 | ) | (110 | ) | (2,106 | ) | (1,676 | ) | ||||
| Amortization of above-/below-market leases | (1,451 | ) | (1,517 | ) | (4,499 | ) | (4,761 | ) | ||||
| Amortization of deferred revenue | (744 | ) | (176 | ) | (2,138 | ) | (310 | ) | ||||
| Non-cash interest expense | 360 | 330 | 1,078 | 975 | ||||||||
| Non-cash compensation | 1,035 | 714 | 3,056 | 2,145 | ||||||||
| FFO, as Adjusted | $ | 27,233 | $ | 23,662 | $ | 78,698 | $ | 66,899 | ||||
| FFO, per share - fully diluted basis | $ | 0.31 | $ | 0.29 | $ | 0.93 | $ | 0.90 | ||||
| FFO, as Adjusted, per share - fully diluted basis | $ | 0.30 | $ | 0.29 | $ | 0.90 | $ | 0.87 | ||||
| FFO, as Adjusted | $ | 27,233 | $ | 23,662 | $ | 78,698 | $ | 66,899 | ||||
| Acquisition costs | (467 | ) | (519 | ) | (1,673 | ) | (1,441 | ) | ||||
| Principal amortization | (887 | ) | (852 | ) | (2,635 | ) | (2,530 | ) | ||||
| Maintenance capital expenditures | (2,361 | ) | (814 | ) | (4,884 | ) | (3,054 | ) | ||||
| Contractual tenant improvements | (550 | ) | (753 | ) | (1,308 | ) | (941 | ) | ||||
| Cash Available for Distribution (CAD) | $ | 22,968 | $ | 20,724 | $ | 68,198 | $ | 58,933 | ||||
| Weighted average common shares outstanding - | ||||||||||||
| fully diluted basis | 90,843,542 | 81,337,275 | 87,460,854 | 76,837,357 |
^(1)^Pro forma assuming a full quarter of operations from the two properties and one parcel of land acquired or placed in service in the third quarter of 2020.
| Debt Schedules<br><br><br>(Unaudited, in thousands) | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| Debt Instrument | Maturity Date | September 30, 2020<br><br><br>Interest Rate | September 30, 2020<br><br><br>Balance^(1)^ | September 30, 2020<br><br><br>Percent of<br><br><br>Total Indebtedness | |||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| Unsecured debt | |||||||||
| Revolving Credit facility | 18-Jun-22^(2)^ | LIBOR + 125bps | $ | - | 0.0% | ||||
| 2016 Term Loan facility | 29-Mar-24 | 2.62%^(3)^ | 100,000 | 11.0% | |||||
| 2018 Term Loan facility | 19-Jun-23 | 3.91%^(4)^ | 150,000 | 16.6% | |||||
| 2017 Series A Senior Notes | 25-May-27 | 4.05% | 95,000 | 10.5% | |||||
| 2017 Series B Senior Notes | 25-May-29 | 4.15% | 50,000 | 5.5% | |||||
| 2017 Series C Senior Notes | 25-May-32 | 4.30% | 30,000 | 3.3% | |||||
| 2019 Series A Senior Notes | 12-Sep-29 | 3.73% | 85,000 | 9.4% | |||||
| 2019 Series B Senior Notes | 12-Sep-31 | 3.83% | 100,000 | 11.0% | |||||
| 2019 Series C Senior Notes | 12-Sep-34 | 3.98% | 90,000 | 9.9% | |||||
| Total unsecured debt | 7.5 years | 3.75% | $ | 700,000 | 77.2% | ||||
| (wtd-avg maturity) | (wtd-avg rate) | ||||||||
| Secured mortgage debt | |||||||||
| DEA - Pleasanton | 18-Oct-23 | LIBOR + 150bps | $ | 15,700 | 1.8% | ||||
| VA - Golden | 1-Apr-24 | 5.00% | 9,054 | 1.0% | |||||
| MEPCOM - Jacksonville | 14-Oct-25 | 4.41% | 8,208 | 0.9% | |||||
| USFS II - Albuquerque | 14-Jul-26 | 4.46% | 16,001 | 1.8% | |||||
| ICE - Charleston | 15-Jan-27 | 4.21% | 16,472 | 1.8% | |||||
| VA - Loma Linda | 6-Jul-27 | 3.59% | 127,500 | 14.1% | |||||
| CBP - Savannah | 10-Jul-33 | 3.40% | 12,184 | 1.4% | |||||
| Total secured mortgage debt | 6.5 years | 3.64% | $ | 205,119 | 22.8% | ||||
| (wtd-avg maturity) | (wtd-avg rate) | ||||||||
| Debt Statistics | September 30, 2020 | September 30, 2020 | |||||||
| Variable rate debt - unhedged | $ | 15,700 | % Variable rate debt - unhedged | 1.7 | % | ||||
| Fixed rate debt | 889,419 | % Fixed rate debt | 98.3 | % | |||||
| Total Debt^(1)^ | $ | 905,119 | |||||||
| Less: cash and cash equivalents | (9,037 | ) | Weighted average maturity | 7.3 years | |||||
| Net Debt | $ | 896,082 | Weighted average interest rate | 3.7 | % | ||||
| Less: adjustment for development projects^(5)^ | (32,044 | ) | |||||||
| Adjusted Net Debt | $ | 864,038 |
^(1)^Excludes unamortized premiums / discounts and deferred financing fees.
^(2)^Revolving credit facility has two six-month as-of-right extension options, subject to certain conditions and the payment of an extension fee.
^(3)^Calculated based on two interest rate swaps with an aggregate notional value of $100.0 million, which effectively fix the interest rate at 2.62% annually based on the Company’s current leverage ratio.
^(4)^Calculated based on four interest rate swaps with an aggregate notional value of $150.0 million, which effectively fix the interest rate at 3.91% annually based on the Company’s current leverage ratio.
^(^^5)^See definition of Adjusted Net Debt on Page 4.
| Debt Maturities<br><br><br>(Unaudited, in thousands) | ||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Secured Debt | Unsecured Debt | |||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| Year | Scheduled<br><br><br>Amortization | Scheduled<br><br><br>Maturities | Scheduled<br><br><br>Maturities | Total | Percentage of<br><br><br>Debt Maturing | Weighted Average<br><br><br>Interest Rate of<br><br><br>Scheduled Maturities | ||||||||
| 2020 | $ | 929 | $ | - | $ | - | $ | 929 | 0.1 | % | - | |||
| 2021 | 4,233 | - | - | 4,233 | 0.5 | % | - | |||||||
| 2022 | 5,297 | - | - | 5,297 | 0.6 | % | - | |||||||
| 2023 | 5,585 | 15,700 | 150,000 | 171,285 | 18.9 | % | 3.70 | % | ||||||
| 2024 | 5,730 | 8,395 | 100,000 | 114,125 | 12.6 | % | 2.82 | % | ||||||
| 2025 | 5,633 | 1,917 | - | 7,550 | 0.8 | % | 4.41 | % | ||||||
| 2026 | 3,686 | 6,368 | - | 10,054 | 1.1 | % | 4.46 | % | ||||||
| 2027 | 1,093 | 134,640 | 95,000 | 230,733 | 25.5 | % | 3.82 | % | ||||||
| 2028 | 983 | - | - | 983 | 0.1 | % | - | |||||||
| 2029 | 1,016 | - | 135,000 | 136,016 | 15.0 | % | 3.89 | % | ||||||
| 2030 | 1,049 | - | - | 1,049 | 0.1 | % | - | |||||||
| 2031 | 1,081 | - | 100,000 | 101,081 | 11.2 | % | 3.83 | % | ||||||
| 2032 | 1,116 | - | 30,000 | 31,116 | 3.4 | % | 4.30 | % | ||||||
| 2033 | 668 | - | - | 668 | 0.1 | % | - | |||||||
| 2034 | - | - | 90,000 | 90,000 | 10.0 | % | 3.98 | % | ||||||
| Total | $ | 38,099 | $ | 167,020 | $ | 700,000 | $ | 905,119 | 100.0 | % |
| Leased Operating Property Overview<br><br><br>(As of September 30, 2020, unaudited) | |||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Property Name | Location | Property Type | Tenant<br><br><br>Lease<br><br><br>Expiration<br><br><br>Year | Year Built /<br><br><br>Renovated | Leased<br><br><br>Square<br><br><br>Feet | Annualized<br><br><br>Lease<br><br><br>Income | Percentage<br><br><br>of Total<br><br><br>Annualized<br><br><br>Lease<br><br><br>Income | Annualized<br><br><br>Lease<br><br><br>Income per<br><br><br>Leased<br><br><br>Square Foot | |||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| U.S. Government Leased Properties | |||||||||||||
| VA - Loma Linda | Loma Linda, CA | Outpatient Clinic | 2036 | 2016 | 327,614 | $ | 16,326,040 | 7.0 | % | $ | 49.83 | ||
| Various GSA - Buffalo | Buffalo, NY | Office | 2020 - 2025 | 2004 | 267,768 | 8,531,273 | 3.7 | % | 31.86 | ||||
| JSC - Suffolk | Suffolk, VA | Office | 2028 | 1993 / 2004 | 403,737 | 8,104,091 | 3.5 | % | 20.07 | ||||
| FBI - Salt Lake | Salt Lake City, UT | Office | 2032 | 2012 | 169,542 | 6,780,764 | 2.9 | % | 39.99 | ||||
| IRS - Fresno | Fresno, CA | Office | 2033 | 2003 | 180,481 | 6,632,220 | 2.8 | % | 36.75 | ||||
| Various GSA - Portland | Portland, OR | Office | 2020 - 2028 | 2002 | 214,103 | 6,506,806 | 2.7 | % | 30.39 | ||||
| Various GSA - Chicago | Des Plaines, IL | Office | 2020 / 2022 | 1971 / 1999 | 224,193 | 6,276,144 | 2.7 | % | 27.99 | ||||
| PTO - Arlington | Arlington, VA | Office | 2035 | 2009 | 190,546 | 6,101,305 | 2.6 | % | 32.02 | ||||
| VA - San Jose | San Jose, CA | Outpatient Clinic | 2038 | 2018 | 90,085 | 5,843,957 | 2.5 | % | 64.87 | ||||
| EPA - Lenexa | Lenexa, KS | Office | 2027 | 2007 / 2012 | 169,585 | 5,485,256 | 2.3 | % | 32.35 | ||||
| FBI - San Antonio | San Antonio, TX | Office | 2021 | 2007 | 148,584 | 5,173,452 | 2.2 | % | 34.82 | ||||
| FEMA - Tracy | Tracy, CA | Warehouse | 2038 | 2018 | 210,373 | 4,614,143 | 1.9 | % | 21.93 | ||||
| FDA - Alameda | Alameda, CA | Laboratory | 2039 | 2019 | 69,624 | 4,561,039 | 1.9 | % | 65.51 | ||||
| FBI - Omaha | Omaha, NE | Office | 2024 | 2009 | 112,196 | 4,426,771 | 1.9 | % | 39.46 | ||||
| TREAS - Parkersburg | Parkersburg, WV | Office | 2021 | 2004 / 2006 | 182,500 | 4,418,656 | 1.9 | % | 24.21 | ||||
| EPA - Kansas City | Kansas City, KS | Laboratory | 2023 | 2003 | 71,979 | 4,235,248 | 1.8 | % | 58.84 | ||||
| VA - South Bend | Mishakawa, IN | Outpatient Clinic | 2032 | 2017 | 86,363 | 4,037,120 | 1.7 | % | 46.75 | ||||
| FDA - Lenexa | Lenexa, KS | Laboratory | 2040 | 2020 | 59,690 | 3,889,134 | 1.6 | % | 65.16 | ||||
| VA - Mobile | Mobile, AL | Outpatient Clinic | 2033 | 2018 | 79,212 | 3,868,354 | 1.6 | % | 48.84 | ||||
| FBI / DEA - El Paso | El Paso, TX | Office | 2028 | 1998 - 2005 | 203,269 | 3,865,816 | 1.6 | % | 19.02 | ||||
| ICE - Charleston | North Charleston, SC | Office | 2021 / 2027 | 1994 / 2012 | 86,733 | 3,821,201 | 1.6 | % | 44.06 | ||||
| USCIS - Lincoln | Lincoln, NE | Office | 2025 | 2005 | 137,671 | 3,748,869 | 1.6 | % | 27.23 | ||||
| FBI - Birmingham | Birmingham, AL | Office | 2022 | 2005 | 96,278 | 3,727,889 | 1.6 | % | 38.72 | ||||
| FBI - New Orleans | New Orleans, LA | Office | 2029 | 1999 / 2006 | 137,679 | 3,639,826 | 1.5 | % | 26.44 | ||||
| FBI - Pittsburgh | Pittsburgh, PA | Office | 2027 | 2001 | 100,054 | 3,622,548 | 1.5 | % | 36.21 | ||||
| DOT - Lakewood | Lakewood, CO | Office | 2024 | 2004 | 122,225 | 3,480,566 | 1.5 | % | 28.48 | ||||
| VA - Chico | Chico, CA | Outpatient Clinic | 2034 | 2019 | 51,647 | 3,170,992 | 1.3 | % | 61.40 | ||||
| USFS II - Albuquerque | Albuquerque, NM | Office | 2026 | 2011 | 98,720 | 3,066,859 | 1.3 | % | 31.07 | ||||
| FDA - College Park | College Park, MD | Laboratory | 2029 | 2004 | 80,677 | 3,011,368 | 1.3 | % | 37.33 | ||||
| OSHA - Sandy | Sandy, UT | Laboratory | 2024 | 2003 | 75,000 | 3,008,391 | 1.3 | % | 40.11 | ||||
| USCIS - Tustin | Tustin, CA | Office | 2034 | 1979 / 2019 | 66,818 | 3,006,961 | 1.3 | % | 45.00 | ||||
| USFS I - Albuquerque | Albuquerque, NM | Office | 2021 | 2006 | 92,455 | 2,925,947 | 1.2 | % | 31.65 | ||||
| DEA - Vista | Vista, CA | Laboratory | 2020 | 2002 | 54,119 | 2,811,893 | 1.2 | % | 51.96 | ||||
| FBI - Richmond | Richmond, VA | Office | 2041 | 2001 | 96,607 | 2,776,810 | 1.2 | % | 28.74 | ||||
| ICE - Albuquerque | Albuquerque, NM | Office | 2027 | 2011 | 71,100 | 2,746,717 | 1.2 | % | 38.63 | ||||
| JUD - Del Rio | Del Rio, TX | Courthouse/Office | 2024 | 1992 / 2004 | 89,880 | 2,708,515 | 1.1 | % | 30.13 | ||||
| FBI - Albany | Albany, NY | Office | 2035 | 1998 | 98,184 | 2,695,476 | 1.1 | % | 27.45 | ||||
| VA - Orange^(1)^ | Orange, CT | Outpatient Clinic | 2034 | 2019 | 56,330 | 2,685,835 | 1.1 | % | 47.68 | ||||
| Leased Operating Property Overview (Cont.)<br><br><br>(As of September 30, 2020, unaudited) | |||||||||||||
| --- | |||||||||||||
| Property Name | Location | Property Type | Tenant<br><br><br>Lease<br><br><br>Expiration<br><br><br>Year | Year Built /<br><br><br>Renovated | Leased<br><br><br>Square<br><br><br>Feet | Annualized<br><br><br>Lease<br><br><br>Income | Percentage<br><br><br>of Total<br><br><br>Annualized<br><br><br>Lease<br><br><br>Income | Annualized<br><br><br>Lease<br><br><br>Income per<br><br><br>Leased<br><br><br>Square Foot | |||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| U.S. Government Leased Properties (Cont.) | |||||||||||||
| DEA - Pleasanton | Pleasanton, CA | Laboratory | 2035 | 2015 | 42,480 | 2,683,459 | 1.1 | % | 63.17 | ||||
| JUD - El Centro | El Centro, CA | Courthouse/Office | 2034 | 2004 | 43,345 | 2,653,366 | 1.1 | % | 61.22 | ||||
| SSA - Charleston | Charleston, WV | Office | 2024 | 1959 / 2000 | 110,000 | 2,625,782 | 1.1 | % | 23.87 | ||||
| FBI - Mobile | Mobile, AL | Office | 2029 | 2001 | 76,112 | 2,588,381 | 1.1 | % | 34.01 | ||||
| DEA - Sterling | Sterling, VA | Laboratory | 2022 | 2001 | 49,692 | 2,574,759 | 1.1 | % | 51.81 | ||||
| TREAS - Birmingham | Birmingham, AL | Office | 2029 | 2014 | 83,676 | 2,468,134 | 1.0 | % | 29.50 | ||||
| DEA - Dallas Lab | Dallas, TX | Laboratory | 2021 | 2001 | 49,723 | 2,442,882 | 1.0 | % | 49.13 | ||||
| JUD - Charleston | Charleston, SC | Courthouse/Office | 2040 | 1999 | 50,888 | 2,333,282 | 1.0 | % | 45.85 | ||||
| DHA - Aurora | Aurora, CO | Office | 2034 | 1998 / 2018 | 101,285 | 2,307,797 | 1.0 | % | 22.79 | ||||
| DEA - Upper Marlboro | Upper Marlboro, MD | Laboratory | 2022 | 2002 | 50,978 | 2,294,520 | 1.0 | % | 45.01 | ||||
| FBI - Little Rock | Little Rock, AR | Office | 2021 | 2001 | 101,977 | 2,261,585 | 1.0 | % | 22.18 | ||||
| MEPCOM - Jacksonville | Jacksonville, FL | Office | 2025 | 2010 | 30,000 | 2,204,619 | 0.9 | % | 73.49 | ||||
| CBP - Savannah | Savannah, GA | Laboratory | 2033 | 2013 | 35,000 | 2,158,730 | 0.9 | % | 61.68 | ||||
| DOE - Lakewood | Lakewood, CO | Office | 2029 | 1999 | 115,650 | 2,084,275 | 0.9 | % | 18.02 | ||||
| DEA - Santa Ana | Santa Ana, CA | Office | 2024 | 2004 | 39,905 | 1,878,451 | 0.8 | % | 47.07 | ||||
| ICE - Otay | San Diego, CA | Office | 2022 / 2026 | 2001 | 49,457 | 1,821,959 | 0.8 | % | 36.84 | ||||
| NPS - Omaha | Omaha, NE | Office | 2024 | 2004 | 62,772 | 1,767,157 | 0.7 | % | 28.15 | ||||
| VA - Golden | Golden, CO | Office/Warehouse | 2026 | 1996 / 2011 | 56,753 | 1,743,712 | 0.7 | % | 30.72 | ||||
| DEA - Dallas | Dallas, TX | Office | 2021 | 2001 | 71,827 | 1,681,772 | 0.7 | % | 23.41 | ||||
| CBP - Sunburst | Sunburst, MT | Office | 2028 | 2008 | 33,000 | 1,615,847 | 0.7 | % | 48.97 | ||||
| USCG - Martinsburg | Martinsburg, WV | Office | 2027 | 2007 | 59,547 | 1,605,912 | 0.7 | % | 26.97 | ||||
| DEA - Birmingham | Birmingham, AL | Office | 2020 | 2005 | 35,616 | 1,585,072 | 0.7 | % | 44.50 | ||||
| JUD - Aberdeen | Aberdeen, MS | Courthouse/Office | 2025 | 2005 | 46,979 | 1,485,529 | 0.6 | % | 31.62 | ||||
| GSA - Clarksburg | Clarksburg, WV | Office | 2024 | 1999 | 63,750 | 1,468,544 | 0.6 | % | 23.04 | ||||
| DEA - North Highlands | Sacramento, CA | Office | 2033 | 2002 | 37,975 | 1,446,712 | 0.6 | % | 38.10 | ||||
| DEA - Albany | Albany, NY | Office | 2025 | 2004 | 31,976 | 1,356,113 | 0.6 | % | 42.41 | ||||
| DEA - Riverside | Riverside, CA | Office | 2032 | 1997 | 34,354 | 1,250,942 | 0.5 | % | 36.41 | ||||
| SSA - Dallas | Dallas, TX | Office | 2035 | 2005 | 27,200 | 953,142 | 0.4 | % | 35.04 | ||||
| ICE - Pittsburgh | Pittsburgh, PA | Office | 2022 / 2023 | 2004 | 25,245 | 800,086 | 0.3 | % | 31.69 | ||||
| VA - Baton Rouge | Baton Rouge, LA | Outpatient Clinic | 2024 | 2004 | 30,000 | 796,236 | 0.3 | % | 26.54 | ||||
| JUD - South Bend | South Bend, IN | Courthouse/Office | 2027 | 1996 / 2011 | 30,119 | 757,954 | 0.3 | % | 25.17 | ||||
| DEA - San Diego | San Diego, CA | Warehouse | 2032 | 1999 | 16,100 | 537,304 | 0.2 | % | 33.37 | ||||
| SSA - Mission Viejo | Mission Viejo, CA | Office | 2020 | 2005 | 11,590 | 473,290 | 0.2 | % | 40.84 | ||||
| DEA - Bakersfield | Bakersfield, CA | Office | 2021 | 2000 | 9,800 | 370,497 | 0.2 | % | 37.81 | ||||
| SSA - San Diego | San Diego, CA | Office | 2032 | 2003 | 10,059 | 340,052 | 0.1 | % | 33.81 | ||||
| Subtotal | 6,798,451 | $ | 235,752,106 | 99.6 | % | $ | 34.68 | ||||||
| Leased Operating Property Overview (Cont.)<br><br><br>(As of September 30, 2020, unaudited) | |||||||||||||
| --- | |||||||||||||
| Property Name | Location | Property Type | Tenant<br><br><br>Lease<br><br><br>Expiration<br><br><br>Year | Year Built /<br><br><br>Renovated | Leased<br><br><br>Square<br><br><br>Feet | Annualized<br><br><br>Lease<br><br><br>Income | Percentage<br><br><br>of Total<br><br><br>Annualized<br><br><br>Lease<br><br><br>Income | Annualized<br><br><br>Lease<br><br><br>Income per<br><br><br>Leased<br><br><br>Square Foot | |||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| Privately Leased Properties | |||||||||||||
| 5998 Osceola Court - United Technologies | Midland, GA | Warehouse/Manufacturing | 2023 | 2014 | 105,641 | 542,973 | 0.2 | % | 5.14 | ||||
| 501 East Hunter Street - Lummus Corporation | Lubbock, TX | Warehouse/Distribution | 2028 | 2013 | 70,078 | 409,602 | 0.2 | % | 5.84 | ||||
| Subtotal | 175,719 | $ | 952,575 | 0.4 | % | $ | 5.42 | ||||||
| Total / Weighted Average | 6,974,170 | $ | 236,704,681 | 100.0 | % | $ | 33.94 |
^(1)^Previously named VA - Northeast.^^
| Tenants<br><br><br>(As of September 30, 2020, unaudited) | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| Tenant | Leased<br><br><br>Square Feet | Percentage<br><br><br>of Leased<br><br><br>Square Feet | Annualized<br><br><br>Lease Income | Percentage<br><br><br>of Total<br><br><br>Annualized<br><br><br>Lease<br><br><br>Income | |||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| U.S. Government | |||||||||||
| Department of Veteran Affairs ("VA") | 12.2 | 882,261 | 12.7 | % | $ | 41,849,203 | 17.7 | % | |||
| Federal Bureau of Investigation ("FBI") | 7.7 | 1,292,484 | 18.5 | % | 41,060,911 | 17.3 | % | ||||
| Drug Enforcement Administration ("DEA") | 4.8 | 603,323 | 8.7 | % | 24,275,553 | 10.3 | % | ||||
| Food and Drug Administration ("FDA") | 15.4 | 209,991 | 3.0 | % | 11,461,541 | 4.8 | % | ||||
| Judiciary of the U.S. ("JUD") | 8.9 | 261,211 | 3.7 | % | 9,938,646 | 4.2 | % | ||||
| Environmental Protection Agency ("EPA") | 5.7 | 241,564 | 3.5 | % | 9,720,504 | 4.1 | % | ||||
| Internal Revenue Service ("IRS") | 10.1 | 236,233 | 3.4 | % | 8,469,253 | 3.6 | % | ||||
| U.S. Joint Staff Command ("JSC") | 7.7 | 403,737 | 5.8 | % | 8,104,091 | 3.4 | % | ||||
| Immigration and Customs Enforcement ("ICE") | 4.9 | 187,848 | 2.7 | % | 7,720,277 | 3.3 | % | ||||
| Bureau of the Fiscal Service ("BFS") | 3.2 | 266,176 | 3.8 | % | 6,886,790 | 2.9 | % | ||||
| U.S. Citizenship and Immigration Services ("USCIS") | 7.8 | 204,489 | 2.9 | % | 6,755,830 | 2.9 | % | ||||
| Patent and Trademark Office ("PTO") | 14.3 | 190,546 | 2.7 | % | 6,101,305 | 2.6 | % | ||||
| U.S. Forest Service ("USFS") | 3.3 | 191,175 | 2.7 | % | 5,992,806 | 2.5 | % | ||||
| Federal Aviation Administration ("FAA") | 0.1 | 209,970 | 3.0 | % | 5,905,825 | 2.5 | % | ||||
| Social Security Administration ("SSA") | 5.6 | 200,866 | 2.9 | % | 5,360,172 | 2.3 | % | ||||
| Federal Emergency Management Agency ("FEMA") | 18.0 | 210,373 | 3.0 | % | 4,614,143 | 1.9 | % | ||||
| Customs and Border Protection ("CBP") | 10.5 | 68,000 | 1.0 | % | 3,774,577 | 1.6 | % | ||||
| Department of Transportation ("DOT") | 3.6 | 129,659 | 1.9 | % | 3,728,860 | 1.6 | % | ||||
| Occupational Safety and Health Administration ("OSHA") | 3.3 | 75,000 | 1.1 | % | 3,008,391 | 1.3 | % | ||||
| Defense Health Agency ("DHA") | 13.6 | 101,285 | 1.5 | % | 2,307,797 | 1.0 | % | ||||
| Military Entrance Processing Command ("MEPCOM") | 5.0 | 30,000 | 0.4 | % | 2,204,619 | 0.9 | % | ||||
| Department of Energy ("DOE") | 8.8 | 120,496 | 1.7 | % | 2,204,095 | 0.9 | % | ||||
| U.S. Department of Agriculture ("A") | 6.2 | 73,031 | 1.0 | % | 2,187,499 | 0.9 | % | ||||
| National Park Service ("NPS") | 3.7 | 62,772 | 0.9 | % | 1,767,157 | 0.7 | % | ||||
| U.S. Coast Guard ("USCG") | 7.2 | 59,547 | 0.9 | % | 1,605,912 | 0.7 | % | ||||
| Small Business Administration ("SBA") | 1.5 | 42,835 | 0.6 | % | 1,335,952 | 0.6 | % | ||||
| National Labor Relations Board ("NLRB") | 5.0 | 36,640 | 0.5 | % | 1,084,442 | 0.5 | % | ||||
| U.S. Army Corps of Engineers ("ACOE") | 4.4 | 39,320 | 0.6 | % | 1,081,097 | 0.5 | % | ||||
| National Oceanic and Atmospheric Administration ("NOAA") | 2.3 | 25,612 | 0.4 | % | 799,198 | 0.3 | % |
All values are in US Dollars.
| Tenants (Cont.)<br><br><br>(As of September 30, 2020, unaudited) | ||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Tenant | Weighted<br><br><br>Average<br><br><br>Remaining<br><br><br>Lease Term^(1)^ | Leased<br><br><br>Square Feet | Percentage<br><br><br>of Leased<br><br><br>Square Feet | Annualized<br><br><br>Lease Income | Percentage<br><br><br>of Total<br><br><br>Annualized<br><br><br>Lease<br><br><br>Income | |||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| U.S. Government (Cont.) | ||||||||||||
| Bureau of Alcohol, Tobacco, Firearms and Explosives ("ATF") | 4.4 | 21,342 | 0.3 | % | 791,975 | 0.3 | % | |||||
| General Services Administration - Other | 5.0 | 18,163 | 0.3 | % | 587,791 | 0.2 | % | |||||
| Bureau of Indian Affairs ("BIA") | 2.9 | 6,477 | 0.1 | % | 218,976 | 0.1 | % | |||||
| U.S. Attorney Office ("USAO") | 3.3 | 6,408 | 0.1 | % | 147,604 | 0.1 | % | |||||
| U.S. Marshals Service ("USMS") | 6.3 | 1,054 | 0.0 | % | 47,752 | 0.0 | % | |||||
| Department of Labor ("DOL") | 3.3 | 1,004 | 0.0 | % | 23,125 | 0.0 | % | |||||
| U.S. Probation Office ("USPO") | 3.3 | 452 | 0.0 | % | 10,419 | 0.0 | % | |||||
| Subtotal | 8.0 | 6,711,344 | 96.3 | % | $ | 233,134,088 | 98.5 | % | ||||
| Private Tenants | ||||||||||||
| Other Private Tenants | 2.2 | 43,855 | 0.6 | % | $ | 1,278,130 | 0.5 | % | ||||
| Providence Health & Services | 4.9 | 21,643 | 0.3 | % | 725,079 | 0.3 | % | |||||
| We Are Sharing Hope SC | 1.0 | 21,609 | 0.3 | % | 614,809 | 0.3 | % | |||||
| United Technologies (Pratt & Whitney) | 3.3 | 105,641 | 1.5 | % | 542,973 | 0.2 | % | |||||
| Lummus Corporation | 7.8 | 70,078 | 1.0 | % | 409,602 | 0.2 | % | |||||
| Subtotal | 4.3 | 262,826 | 3.7 | % | $ | 3,570,593 | 1.5 | % | ||||
| Total / Weighted Average | 7.8 | 6,974,170 | 100.0 | % | $ | 236,704,681 | 100.0 | % |
^(1)^Weighted based on leased square feet.
| Lease Expirations<br><br><br>(As of September 30, 2020, unaudited) | |||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Year of Lease Expiration | Number of<br><br><br>Leases<br><br><br>Expiring | Leased Square<br><br><br>Footage<br><br><br>Expiring | Percentage of<br><br><br>Total Leased Square<br><br><br>Footage<br><br><br>Expiring | Annualized<br><br><br>Lease Income<br><br><br>Expiring | Percentage of<br><br><br>Total Annualized<br><br><br>Lease Income<br><br><br>Expiring | Annualized<br><br><br>Lease Income<br><br><br>per Leased<br><br><br>Square Foot Expiring | |||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| 2020 | 10 | 381,793 | 5.5 | % | 13,047,860 | 5.5 | % | 34.18 | |||||
| 2021 | 12 | 834,588 | 12.0 | % | 24,882,504 | 10.5 | % | 29.81 | |||||
| 2022 | 9 | 270,493 | 3.9 | % | 11,145,086 | 4.7 | % | 41.20 | |||||
| 2023 | 8 | 226,956 | 3.3 | % | 6,282,210 | 2.7 | % | 27.68 | |||||
| 2024 | 10 | 727,374 | 10.4 | % | 22,794,280 | 9.6 | % | 31.34 | |||||
| 2025 | 12 | 371,827 | 5.3 | % | 12,608,603 | 5.3 | % | 33.91 | |||||
| 2026 | 3 | 157,011 | 2.3 | % | 4,867,216 | 2.1 | % | 31.00 | |||||
| 2027 | 6 | 495,529 | 7.1 | % | 17,424,779 | 7.4 | % | 35.16 | |||||
| 2028 | 8 | 783,003 | 11.2 | % | 16,205,223 | 6.8 | % | 20.70 | |||||
| 2029 | 5 | 493,794 | 7.1 | % | 13,791,984 | 5.8 | % | 27.93 | |||||
| Thereafter | 25 | 2,231,802 | 31.9 | % | 93,654,936 | 39.6 | % | 41.96 | |||||
| Total / Weighted Average | 108 | 6,974,170 | 100.0 | % | $ | 236,704,681 | 100.0 | % | $ | 33.94 |
| Summary of Re/Development Projects<br><br><br>(As of September 30, 2020, unaudited, in thousands, except square feet) | ||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Projects Under Construction^(1)^ | ||||||||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| Property Name | Location | Property Type | Total Leased Square Feet | Lease Term | Anticipated Total Cost | Cost to Date | Total Lump-Sum Reimbursement | Anticipated Completion Date | Anticipated Lease Commencement | |||||||||
| N/A | - | - | - | - | $ | - | $ | - | $ | - | - | - | ||||||
| Projects in Design^(2)^ | ||||||||||||||||||
| Property Name | Location | Property Type | Total Estimated Leased Square Feet | Lease Term | Cost to Date | Anticipated Completion Date | Anticipated Lease Commencement | |||||||||||
| FDA - Atlanta | Atlanta, GA | Laboratory | 162,000 | 20-Year | $ | 27,161 | 2Q 2023 | 2Q 2023 | ||||||||||
| Total | 162,000 | $ | 27,161 | |||||||||||||||
| Projects Previously Completed with Outstanding Lump-Sum Reimbursements | ||||||||||||||||||
| Property Name | Location | Property Type | Total Leased Square Feet | Lease Term | Outstanding Lump-Sum Reimbursement^(3)^ | Completion Date | Lease Commencement | |||||||||||
| FDA - Lenexa | Lenexa, KS | Laboratory | 59,690 | 20-Year | $ | 21,180 | September 2020 | September 2020 | ||||||||||
| Total | 59,690 | $ | 21,180 |
^(1)^Includes properties under construction for which design is complete.
^(2)^Includes projects in the design phase for which project scope is not fully determined.
^(^^3^^)^Includes reimbursement of lump-sum tenant improvement costs and development fees.
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