Easterly Government Properties Reports Third Quarter 2024 Results
Highlights for the Quarter Ended
-
Net income of
$5.1 million , or$0.05 per share on a fully diluted basis -
Core FFO of
$32.2 million , or$0.30 per share on a fully diluted basis -
Entered into a construction loan agreement to lend up to
$52.1 million to a developer in connection with the re-development of an approximately 68,669 square footDrug Enforcement Administration (DEA) facility located inBedford, Massachusetts (“DEA - Bedford”) -
Acquired, through the Company's previously announced joint venture (the “JV”), a 193,100 leased square foot
Department of Veterans Affairs (the “VA”) outpatient clinic located inJacksonville, Florida (“VA - Jacksonville”).VA -Jacksonville is the final property to be acquired in the previously announced portfolio of 10 properties 100% leased to theVA under predominately 20-year firm term leases -
Acquired a 99,246 square foot facility 100% leased to
(NYSE: NOC, S&P: BBB+), a multinational aerospace and defense company and located inNorthrop Grumman Systems CorporationBeavercreek, Ohio , a suburb ofDayton (“Northrop Grumman - Dayton”) -
Issued an aggregate of 2,631,727 shares of the Company's common stock in settlement of previously entered into forward sales transactions through the Company's
$300.0 million ATM Program launched inDecember 2019 (the “December 2019 ATM Program”) at a weighted average price per share of$13.33 , raising net proceeds to the Company of approximately$35.1 million
“Easterly's accelerated acquisition activity this quarter underscores our pipeline of long-term growth opportunities,” said
Financial Results for the Nine Months Ended
Net income of
Core FFO of
Portfolio Operations
As of
Balance Sheet and Capital Markets Activity
As of
Acquisitions and Development Lending Activity
On
On
On
Dividend
On
Subsequent Events
On
Subsequent to the quarter ending
Guidance
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.
Outlook for the 12 Months Ending
The Company is maintaining its guidance for full-year 2024 Core FFO per share on a fully diluted basis at a range of
|
|
Low |
|
|
High |
||
Net income (loss) per share – fully diluted basis |
|
$ |
0.22 |
|
|
|
0.24 |
Plus: Company’s share of real estate depreciation and amortization |
|
$ |
0.92 |
|
|
|
0.92 |
FFO per share – fully diluted basis |
|
$ |
1.14 |
|
|
|
1.16 |
Plus: Company’s share of depreciation of non-real estate assets |
|
$ |
0.01 |
|
|
|
0.01 |
Core FFO per share – fully diluted basis |
|
$ |
1.15 |
|
|
|
1.17 |
This guidance assumes (i) approximately
Outlook for the 12 Months Ending
The Company is introducing its guidance for full-year 2025 Core FFO per share on a fully diluted basis at a range of
|
|
Low |
|
|
High |
||
Net income (loss) per share – fully diluted basis |
|
$ |
0.24 |
|
|
|
0.28 |
Plus: Company’s share of real estate depreciation and amortization |
|
$ |
0.92 |
|
|
|
0.92 |
FFO per share – fully diluted basis |
|
$ |
1.16 |
|
|
|
1.20 |
Plus: Company’s share of depreciation of non-real estate assets |
|
$ |
0.01 |
|
|
|
0.01 |
Core FFO per share – fully diluted basis |
|
$ |
1.17 |
|
|
|
1.21 |
This guidance assumes
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. A reconciliation of the differences between each non-GAAP financial measure and the comparable GAAP financial measure are included in this press release following the consolidated financial statements. 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
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, nonrecurring expenditures and the unconsolidated real estate venture’s allocated share of these adjustments. 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.
Core Funds from Operations (Core FFO) adjusts FFO to present an alternative measure of the Company's operating performance, which, when applicable, excludes items which it believes are not representative of ongoing operating results, such as liability management related costs (including losses on extinguishment of debt and modification costs), catastrophic event charges, depreciation of non-real estate assets, provision for credit losses, and the unconsolidated real estate venture's allocated share of these adjustments. In future periods, the Company may also exclude other items from Core FFO that it believes may help investors compare its results. The Company believes Core FFO more accurately reflects the ongoing operational and financial performance of the Company's core business.
EBITDA is calculated as the sum of net income (loss) before interest expense, taxes, depreciation and amortization, (gain) loss on the sale of operating properties, impairment loss, and the unconsolidated real estate venture’s allocated share of these adjustments. 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 includes the Company’s share of FFO generated by unconsolidated affiliates. 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.
Net Debt and Adjusted Net Debt Net Debt represents the Company's consolidated debt and its share of unconsolidated debt adjusted to exclude its share of unamortized premiums and discounts and deferred financing fees, less its share of cash and cash equivalents and property acquisition closing escrow, net of deposit. 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
Other Definitions
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.
Conference Call Information
The Company will host a webcast and conference call at
About
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 Core 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
Balance Sheet (Unaudited, in thousands, except share amounts) |
||||||||
|
|
|
|
|
|
|
||
Assets |
|
|
|
|
|
|
||
Real estate properties, net |
|
$ |
2,457,256 |
|
|
$ |
2,319,143 |
|
Cash and cash equivalents |
|
|
31,202 |
|
|
|
9,381 |
|
Restricted cash |
|
|
8,005 |
|
|
|
12,558 |
|
Tenant accounts receivable |
|
|
70,280 |
|
|
|
66,274 |
|
Investment in unconsolidated real estate venture |
|
|
315,886 |
|
|
|
284,544 |
|
Real estate loan receivable, net |
|
|
30,689 |
|
|
|
- |
|
Intangible assets, net |
|
|
146,204 |
|
|
|
148,453 |
|
Interest rate swaps |
|
|
514 |
|
|
|
1,994 |
|
Prepaid expenses and other assets |
|
|
41,073 |
|
|
|
37,405 |
|
Assets held for sale |
|
|
2,002 |
|
|
|
- |
|
Total assets |
|
$ |
3,103,111 |
|
|
$ |
2,879,752 |
|
|
|
|
|
|
|
|
||
Liabilities |
|
|
|
|
|
|
||
Revolving credit facility |
|
|
149,550 |
|
|
|
79,000 |
|
Term loan facilities, net |
|
|
273,851 |
|
|
|
299,108 |
|
Notes payable, net |
|
|
894,523 |
|
|
|
696,532 |
|
Mortgage notes payable, net |
|
|
156,653 |
|
|
|
220,195 |
|
Intangible liabilities, net |
|
|
11,367 |
|
|
|
12,480 |
|
Deferred revenue |
|
|
121,767 |
|
|
|
82,712 |
|
Accounts payable, accrued expenses and other liabilities |
|
|
113,766 |
|
|
|
80,209 |
|
Total liabilities |
|
|
1,721,477 |
|
|
|
1,470,236 |
|
|
|
|
|
|
|
|
||
Equity |
|
|
|
|
|
|
||
Common stock, par value |
|
|
1,056 |
|
|
|
1,010 |
|
Additional paid-in capital |
|
|
1,845,271 |
|
|
|
1,783,338 |
|
Retained earnings |
|
|
126,401 |
|
|
|
112,301 |
|
Cumulative dividends |
|
|
(658,042 |
) |
|
|
(576,319 |
) |
Accumulated other comprehensive income |
|
|
489 |
|
|
|
1,871 |
|
Total stockholders' equity |
|
|
1,315,175 |
|
|
|
1,322,201 |
|
Non-controlling interest in |
|
|
66,459 |
|
|
|
87,315 |
|
Total equity |
|
|
1,381,634 |
|
|
|
1,409,516 |
|
Total liabilities and equity |
|
$ |
3,103,111 |
|
|
$ |
2,879,752 |
|
|
|
|
|
|
|
|
Income Statement (Unaudited, in thousands, except share and per share amounts) |
||||||||||||||||
|
|
Three Months Ended |
|
|
Nine Months Ended |
|
||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Revenues |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Rental income |
|
$ |
72,536 |
|
|
$ |
68,205 |
|
|
$ |
215,465 |
|
|
$ |
204,111 |
|
Tenant reimbursements |
|
|
663 |
|
|
|
2,704 |
|
|
|
4,494 |
|
|
|
7,279 |
|
Asset management income |
|
|
579 |
|
|
|
526 |
|
|
|
1,680 |
|
|
|
1,560 |
|
Other income |
|
|
1,003 |
|
|
|
579 |
|
|
|
2,163 |
|
|
|
1,657 |
|
Total revenues |
|
|
74,781 |
|
|
|
72,014 |
|
|
|
223,802 |
|
|
|
214,607 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Expenses |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Property operating |
|
|
16,710 |
|
|
|
18,746 |
|
|
|
51,420 |
|
|
|
54,263 |
|
Real estate taxes |
|
|
8,000 |
|
|
|
7,814 |
|
|
|
24,072 |
|
|
|
22,901 |
|
Depreciation and amortization |
|
|
23,795 |
|
|
|
22,245 |
|
|
|
71,681 |
|
|
|
67,945 |
|
Acquisition costs |
|
|
600 |
|
|
|
321 |
|
|
|
1,427 |
|
|
|
1,226 |
|
Corporate general and administrative |
|
|
4,667 |
|
|
|
6,107 |
|
|
|
18,032 |
|
|
|
20,426 |
|
Provision for credit losses (1) |
|
|
1,260 |
|
|
|
- |
|
|
|
1,478 |
|
|
|
- |
|
Total expenses |
|
|
55,032 |
|
|
|
55,233 |
|
|
|
168,110 |
|
|
|
166,761 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Other income (expense) |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Income from unconsolidated real estate venture |
|
|
1,575 |
|
|
|
1,346 |
|
|
|
4,367 |
|
|
|
4,166 |
|
Interest expense, net |
|
|
(16,209 |
) |
|
|
(12,046 |
) |
|
|
(45,210 |
) |
|
|
(35,739 |
) |
Net income |
|
|
5,115 |
|
|
|
6,081 |
|
|
|
14,849 |
|
|
|
16,273 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Non-controlling interest in |
|
|
(252 |
) |
|
|
(707 |
) |
|
|
(749 |
) |
|
|
(1,905 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net income available to |
|
$ |
4,863 |
|
|
$ |
5,374 |
|
|
$ |
14,100 |
|
|
$ |
14,368 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net income available to |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Basic |
|
$ |
0.05 |
|
|
$ |
0.06 |
|
|
$ |
0.13 |
|
|
$ |
0.15 |
|
Diluted |
|
$ |
0.05 |
|
|
$ |
0.06 |
|
|
$ |
0.13 |
|
|
$ |
0.15 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Weighted-average common shares outstanding: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Basic |
|
|
103,515,246 |
|
|
|
93,537,121 |
|
|
|
102,671,381 |
|
|
|
92,674,039 |
|
Diluted |
|
|
103,904,581 |
|
|
|
93,849,444 |
|
|
|
102,980,995 |
|
|
|
92,938,221 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net income, per share - fully diluted basis |
|
$ |
0.05 |
|
|
$ |
0.06 |
|
|
$ |
0.14 |
|
|
$ |
0.15 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Weighted average common shares outstanding - fully diluted basis |
|
|
108,488,604 |
|
|
|
105,888,188 |
|
|
|
108,162,965 |
|
|
|
105,014,057 |
|
(1) Provision for credit loss amounts previously classified within Corporate general and administrative have been reclassified to Provision for credit losses on our Consolidated Statements of Operations to conform with the current period presentation. |
EBITDA (Unaudited, in thousands) |
||||||||||||||||
|
|
Three Months Ended |
|
|
Nine Months Ended |
|
||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net income |
|
$ |
5,115 |
|
|
$ |
6,081 |
|
|
$ |
14,849 |
|
|
$ |
16,273 |
|
Depreciation and amortization |
|
|
23,795 |
|
|
|
22,245 |
|
|
|
71,681 |
|
|
|
67,945 |
|
Interest expense |
|
|
16,209 |
|
|
|
12,046 |
|
|
|
45,210 |
|
|
|
35,739 |
|
Tax expense |
|
|
(431 |
) |
|
|
283 |
|
|
|
(458 |
) |
|
|
803 |
|
Unconsolidated real estate venture allocated share of above adjustments |
|
|
1,999 |
|
|
|
1,960 |
|
|
|
6,154 |
|
|
|
5,842 |
|
EBITDA |
|
$ |
46,687 |
|
|
$ |
42,615 |
|
|
$ |
137,436 |
|
|
$ |
126,602 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Pro forma adjustments(1) |
|
|
853 |
|
|
|
|
|
|
|
|
|
|
|||
Pro forma EBITDA |
|
$ |
47,540 |
|
|
|
|
|
|
|
|
|
|
|||
(1) Pro forma assuming a full quarter of operations from the two operating properties acquired in the third quarter of 2024. |
FFO and CAD (Unaudited, in thousands, except share and per share amounts) |
||||||||||||||||
|
|
Three Months Ended |
|
|
Nine Months Ended |
|
||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net income |
|
$ |
5,115 |
|
|
$ |
6,081 |
|
|
$ |
14,849 |
|
|
$ |
16,273 |
|
Depreciation of real estate assets |
|
|
23,543 |
|
|
|
21,995 |
|
|
|
70,926 |
|
|
|
67,194 |
|
Unconsolidated real estate venture allocated share of above adjustments |
|
|
1,976 |
|
|
|
1,887 |
|
|
|
5,984 |
|
|
|
5,637 |
|
FFO |
|
$ |
30,634 |
|
|
$ |
29,963 |
|
|
$ |
91,759 |
|
|
$ |
89,104 |
|
Adjustments to FFO: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Loss on extinguishment of debt |
|
$ |
2 |
|
|
$ |
- |
|
|
$ |
260 |
|
|
$ |
14 |
|
Provision for credit losses |
|
|
1,260 |
|
|
|
- |
|
|
|
1,478 |
|
|
|
- |
|
Natural disaster event expense, net of recovery |
|
|
7 |
|
|
|
8 |
|
|
|
(1 |
) |
|
|
86 |
|
Depreciation of non-real estate assets |
|
|
252 |
|
|
|
250 |
|
|
|
755 |
|
|
|
751 |
|
Unconsolidated real estate venture allocated share of above adjustments |
|
|
17 |
|
|
|
17 |
|
|
|
50 |
|
|
|
50 |
|
Core FFO |
|
$ |
32,172 |
|
|
$ |
30,238 |
|
|
$ |
94,301 |
|
|
$ |
90,005 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
FFO, per share - fully diluted basis |
|
$ |
0.28 |
|
|
$ |
0.28 |
|
|
$ |
0.85 |
|
|
$ |
0.85 |
|
Core FFO, per share - fully diluted basis |
|
$ |
0.30 |
|
|
$ |
0.29 |
|
|
$ |
0.87 |
|
|
$ |
0.86 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Core FFO |
|
$ |
32,172 |
|
|
$ |
30,238 |
|
|
$ |
94,301 |
|
|
$ |
90,005 |
|
Straight-line rent and other non-cash adjustments |
|
|
(1,349 |
) |
|
|
(1,296 |
) |
|
|
(3,123 |
) |
|
|
(2,661 |
) |
Amortization of above-/below-market leases |
|
|
(390 |
) |
|
|
(676 |
) |
|
|
(1,464 |
) |
|
|
(2,052 |
) |
Amortization of deferred revenue |
|
|
(1,762 |
) |
|
|
(1,572 |
) |
|
|
(5,125 |
) |
|
|
(4,678 |
) |
Non-cash interest expense |
|
|
662 |
|
|
|
264 |
|
|
|
1,358 |
|
|
|
752 |
|
Non-cash compensation |
|
|
(180 |
) |
|
|
1,658 |
|
|
|
2,209 |
|
|
|
4,625 |
|
Natural Disaster event expense, net of recovery |
|
|
(7 |
) |
|
|
(8 |
) |
|
|
1 |
|
|
|
(86 |
) |
Principal amortization |
|
|
(1,093 |
) |
|
|
(1,100 |
) |
|
|
(3,288 |
) |
|
|
(3,226 |
) |
Maintenance capital expenditures |
|
|
(2,672 |
) |
|
|
(3,207 |
) |
|
|
(8,209 |
) |
|
|
(8,276 |
) |
Contractual tenant improvements |
|
|
(287 |
) |
|
|
(355 |
) |
|
|
(860 |
) |
|
|
(1,368 |
) |
Unconsolidated real estate venture allocated share of above adjustments |
|
|
8 |
|
|
|
12 |
|
|
|
(7 |
) |
|
|
(62 |
) |
Cash Available for Distribution (CAD) |
|
$ |
25,102 |
|
|
$ |
23,958 |
|
|
$ |
75,793 |
|
|
$ |
72,973 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Weighted average common shares outstanding - fully diluted basis |
|
|
108,488,604 |
|
|
|
105,888,188 |
|
|
|
108,162,965 |
|
|
|
105,014,057 |
|
Net Debt and Adjusted Net Debt (Unaudited, in thousands) |
|||
|
|
|
|
Total Debt (1) |
$ |
1,481,463 |
|
Less: Cash and cash equivalents |
|
(33,239 |
) |
Net Debt |
$ |
1,448,224 |
|
Less: Adjustment for development projects(2) |
|
(121,270 |
) |
Adjusted Net Debt |
$ |
1,326,954 |
|
|
|
|
|
1 Excludes unamortized premiums / discounts and deferred financing fees. 2 See definition of Adjusted Net Debt on Page 5 of this release. |
View source version on businesswire.com: https://www.businesswire.com/news/home/20241105786986/en/
Senior Vice President, Investor Relations & Operations
202-596-3947
ir@easterlyreit.com
Source: