Easterly Government Properties, Inc. (DEA) Bundle
A Brief History of H3
H3 has established itself as a significant player in the real estate investment sector, particularly focusing on government properties. The company has undergone various transformations and expansions that have solidified its market position.
Company Formation and Early Years
Founded in 2012, H3 initially focused on acquiring and managing properties leased to government agencies. This strategic approach allowed the company to tap into a stable revenue stream, given the consistent demand for government facilities.
Recent Acquisitions and Growth
As of September 30, 2024, H3 has expanded its portfolio significantly. The company acquired seven operating properties since September 30, 2023, contributing to a rental income increase of $11.4 million year-over-year. The total revenues for the nine months ended September 30, 2024, reached $223.8 million, an increase from $214.6 million in the same period of 2023.
| Financial Metrics | 2024 (9 months) | 2023 (9 months) | Change |
|---|---|---|---|
| Total Revenues | $223.8 million | $214.6 million | $9.2 million |
| Rental Income | $215.5 million | $204.1 million | $11.4 million |
| Net Income | $14.8 million | $16.3 million | $(1.5 million) |
Financial Performance
Despite the increase in revenues, H3 reported a net income decrease to $14.8 million for the nine months ended September 30, 2024, down from $16.3 million in the previous year. This decline is attributed to increased interest expenses, which rose by $9.5 million due to new debt instruments and higher interest rates.
Debt Structure
As of September 30, 2024, H3's total debt stood at $1.474 billion. The company maintains a diversified debt portfolio, which includes:
- Revolving credit facility: $149.6 million
- Term loan facilities: $274.5 million
- Notes payable: $900 million
The weighted average interest rates on these debts vary, with the revolving credit facility linked to SOFR plus a margin based on leverage ratios, while some term loans have fixed rates.
Dividend Policy
H3 adheres to a strict dividend policy to maintain its REIT status, distributing at least 90% of its taxable income. As of 2024, the company declared dividends of $0.265 per share for each quarter.
Future Outlook
Looking ahead, H3 aims to leverage its existing cash reserves and operating cash flows to finance future acquisitions and development projects, ensuring continued growth in its property holdings and revenue streams. The company had approximately $31.2 million in cash and cash equivalents as of September 30, 2024.
A Who Owns Easterly Government Properties, Inc. (DEA)
Ownership Structure
The ownership of Easterly Government Properties, Inc. (DEA) is structured through the Operating Partnership, in which the company holds approximately 95.2% of the aggregate limited partnership interests as of September 30, 2024.
Major Shareholders
As of September 30, 2024, the major shareholders of Easterly Government Properties included institutional investors and individual shareholders. The top institutional holders are:
| Shareholder | Ownership Percentage | Shares Held |
|---|---|---|
| The Vanguard Group, Inc. | 8.9% | 9,203,352 |
| BlackRock, Inc. | 7.5% | 7,847,689 |
| State Street Corporation | 4.9% | 5,110,463 |
| Glenview Capital Management, LLC | 3.6% | 3,734,660 |
| Invesco Ltd. | 3.1% | 3,233,548 |
Insider Ownership
Insider ownership, which includes executive officers and directors, is significant in Easterly Government Properties, reflecting confidence in the company’s mission and future growth. As of September 30, 2024, insider ownership was approximately 3.2%.
Joint Ventures
Easterly Government Properties has a joint venture (JV) interest of 53.0% in a portfolio of government-leased properties, which includes a total of 1,214,165 leased square feet as of September 30, 2024. The JV owns properties primarily leased to the U.S. Department of Veterans Affairs.
Annualized Lease Income
As of September 30, 2024, the total annualized lease income for Easterly Government Properties was $335,124,106, with approximately 96.4% of this income generated from U.S. Government tenants.
Recent Acquisitions
- On April 12, 2024, a 129,046 square foot facility leased to U.S. Immigration and Customs Enforcement was acquired.
- On May 7, 2024, a 27,840 square foot facility leased to Homeland Security Investigations was acquired.
- On August 29, 2024, a 193,100 square foot outpatient facility was acquired, completing a portfolio of ten properties leased to the VA.
Financial Performance
For the three months ended September 30, 2024, Easterly reported:
- Net income of $5,115,000
- Net income available to common stockholders of $4,715,000
- Basic earnings per share of $0.05
Dividend Information
In 2024, Easterly Government Properties declared a quarterly dividend of $0.265 per share, consistent across the first three quarters of the year.
Debt Structure
The total debt of Easterly Government Properties as of September 30, 2024, was $1,474,577,000, with significant components being:
- Senior unsecured notes totaling $900,000,000
- Mortgage notes payable of $157,413,000
Future Commitments
The company has a commitment through a loan receivable of $52.1 million as of September 30, 2024, with an outstanding balance of $31.9 million.
Easterly Government Properties, Inc. (DEA) Mission Statement
Easterly Government Properties, Inc. is an internally managed real estate investment trust (REIT) focused primarily on the acquisition, development, and management of Class A commercial properties that are leased to U.S. Government agencies serving essential functions. The company generates substantially all of its revenue by leasing properties to such agencies, either directly or through the U.S. General Services Administration (GSA). The objective is to generate attractive risk-adjusted returns for stockholders over the long term through dividends and capital appreciation.
The focus is on acquiring, developing, and managing U.S. Government-leased properties that are essential to supporting the mission of the tenant agency. Easterly strives to be a partner of choice for the U.S. Government, working closely with tenant agencies to meet their needs and objectives. The company also considers opportunities to add properties leased to state and local governments with strong creditworthiness and other opportunities that support the mission of select government agencies.
Key Financial Data as of September 30, 2024
| Metric | Value |
|---|---|
| Total Assets | $3,103,111,000 |
| Total Liabilities | $1,721,477,000 |
| Total Equity | $1,381,634,000 |
| Operating Properties Owned | 85 |
| Properties through Joint Venture | 10 |
| Total Leased Square Feet | 9,330,122 |
| Percentage Leased | 97% |
| Weighted Average Age of Properties | 14.8 years |
| Annualized Lease Income per Leased Square Foot | $35.92 |
Recent Acquisitions
- April 12, 2024: Acquired a 129,046 square foot U.S. Immigration and Customs Enforcement facility near Dallas, Texas.
- May 7, 2024: Acquired a 27,840 square foot Homeland Security Investigations facility in Orlando, Florida.
- May 9, 2024: Acquired a 49,420 square foot ICE facility in Orlando, Florida.
- September 4, 2024: Acquired a 99,246 square foot Northrop Grumman facility near Dayton, Ohio.
- October 10, 2024: Acquired a 104,136 square foot Northrop Grumman facility in Aurora, Colorado.
Financial Performance
| Period | Net Income | EPS (Basic) | EPS (Diluted) | Dividends Declared per Share |
|---|---|---|---|---|
| Three months ended September 30, 2024 | $5,115,000 | $0.05 | $0.05 | $0.265 |
| Nine months ended September 30, 2024 | $14,849,000 | $0.13 | $0.13 | $0.795 |
Lease Expiration Schedule as of September 30, 2024
| Year | Number of Leases Expiring | Total Annualized Lease Income Expiring | Percentage of Total Annualized Lease Income | Lease Income per Leased Square Foot Expiring |
|---|---|---|---|---|
| 2024 | 1 | $92,455 | 1.0% | $35.37 |
| 2025 | 12 | $592,906 | 6.4% | $32.12 |
| 2026 | 6 | $394,832 | 4.2% | $36.81 |
| 2027 | 9 | $506,510 | 5.4% | $37.18 |
| 2028 | 11 | $802,397 | 8.6% | $21.94 |
| 2029 | 8 | $631,036 | 6.8% | $30.32 |
| 2030 | 1 | $1,536 | 0.0% | $38.72 |
| 2031 | 3 | $117,875 | 1.3% | $38.69 |
| 2032 | 9 | $579,524 | 6.2% | $32.49 |
| 2033 | 10 | $566,197 | 6.1% | $39.27 |
| Thereafter | 60 | $5,044,854 | 54.0% | $39.06 |
| Total | 130 | $9,330,122 | 100.0% | $35.92 |
How Easterly Government Properties, Inc. (DEA) Works
Overview of Operations
Easterly Government Properties, Inc. (DEA) is an internally managed real estate investment trust (REIT) focused on the acquisition, development, and management of Class A commercial properties leased primarily to U.S. Government agencies. As of September 30, 2024, DEA owned 85 operating properties and had an unconsolidated joint venture (JV) that managed 10 additional properties, totaling approximately 9.3 million leased square feet.
Financial Performance
For the nine months ended September 30, 2024, DEA reported total revenues of $223.8 million, an increase from $214.6 million in the same period of 2023. The rental income for the nine-month period was $215.5 million, up from $204.1 million year-over-year.
| Financial Metrics | 2024 (Nine Months) | 2023 (Nine Months) |
|---|---|---|
| Total Revenues | $223.8 million | $214.6 million |
| Rental Income | $215.5 million | $204.1 million |
| Net Income | $14.8 million | $16.3 million |
| Basic Earnings per Share (EPS) | $0.13 | $0.15 |
| Diluted EPS | $0.13 | $0.15 |
Expenses and Profitability
Total expenses for the nine months ended September 30, 2024, were $168.1 million, compared to $166.8 million in the previous year. The primary components of expenses included property operating costs, real estate taxes, and depreciation and amortization.
| Expense Categories | 2024 (Nine Months) | 2023 (Nine Months) |
|---|---|---|
| Property Operating Expenses | $51.4 million | $54.3 million |
| Real Estate Taxes | $24.1 million | $22.9 million |
| Depreciation and Amortization | $71.7 million | $67.9 million |
| Corporate General and Administrative | $18.0 million | $20.4 million |
Leasing and Property Management
As of September 30, 2024, DEA's properties were 97% leased. The weighted average annualized lease income per leased square foot was $35.92.
| Lease Metrics | Value |
|---|---|
| Percentage Leased | 97% |
| Weighted Average Annualized Lease Income per Square Foot | $35.92 |
| Number of Operating Properties | 85 |
| Joint Venture Properties | 10 |
Acquisitions and Developments
In 2024, DEA made several acquisitions of government-leased properties, including:
- A 129,046 square foot U.S. Immigration and Customs Enforcement facility in Dallas, Texas.
- A 27,840 square foot Homeland Security Investigations facility in Orlando, Florida.
- A 49,420 square foot ICE facility in Orlando, Florida.
- A 99,246 square foot Northrop Grumman facility in Dayton, Ohio.
Capital Structure and Liquidity
As of September 30, 2024, DEA had approximately $31.2 million in cash and cash equivalents and an available revolving credit facility of approximately $250.3 million. The company anticipates using these funds for property acquisitions, tenant improvements, and other capital obligations.
| Liquidity Metrics | Value |
|---|---|
| Cash and Cash Equivalents | $31.2 million |
| Available Revolving Credit Facility | $250.3 million |
Dividend Policy
DEA has maintained a quarterly dividend of $0.265 per share throughout 2024. This distribution aligns with the REIT requirement to distribute at least 90% of taxable income.
| Dividend Payments | 2024 |
|---|---|
| Q1 Dividend | $0.265 |
| Q2 Dividend | $0.265 |
| Q3 Dividend | $0.265 |
Conclusion
The information above provides a detailed overview of how Easterly Government Properties, Inc. operates as of 2024, including its financial performance, property management, acquisitions, and capital structure.
How Easterly Government Properties, Inc. (DEA) Makes Money
Revenue Generation
Easterly Government Properties, Inc. (DEA) primarily generates revenue through leasing properties to U.S. Government agencies. As of September 30, 2024, approximately 96.4% of total annualized lease income was derived from U.S. Government tenants. The company owns 85 operating properties and has 10 properties through a joint venture, encompassing approximately 9.3 million leased square feet.
| Revenue Stream | Q3 2024 (in thousands) | Q3 2023 (in thousands) | Change (in thousands) |
|---|---|---|---|
| Rental Income | $72,536 | $68,205 | $4,331 |
| Tenant Reimbursements | $663 | $2,704 | ($2,041) |
| Asset Management Income | $579 | $526 | $53 |
| Other Income | $1,003 | $579 | $424 |
| Total Revenues | $74,781 | $72,014 | $2,767 |
Lease Structure
The leases are predominantly long-term, with a weighted average lease term supporting the stability of rental income. As of September 30, 2024, the average annualized lease income per leased square foot was $35.92. The company focuses on essential properties leased to government agencies, which typically include options for lease extensions.
Recent Acquisitions
In 2024, DEA expanded its portfolio significantly through several acquisitions, including:
- A 129,046 square foot facility leased to U.S. Immigration and Customs Enforcement (ICE) in Dallas, Texas.
- A 27,840 square foot Homeland Security Investigations (HSI) facility in Orlando, Florida.
- A 49,420 square foot ICE facility also in Orlando, Florida.
- A 99,246 square foot Northrop Grumman facility in Dayton, Ohio.
Financial Performance
For the nine months ended September 30, 2024, total revenues increased to $223.8 million, up from $214.6 million in the same period of 2023, reflecting a growth of $9.2 million. This growth was primarily driven by the acquisition of seven operating properties.
| Financial Metrics | Q3 2024 (in thousands) | Q3 2023 (in thousands) | Change (in thousands) |
|---|---|---|---|
| Net Income | $5,115 | $6,081 | ($966) |
| Total Expenses | $55,032 | $55,233 | ($201) |
| Depreciation and Amortization | $23,795 | $22,245 | $1,550 |
| Interest Expense, Net | ($16,209) | ($12,046) | ($4,163) |
Cost Structure
As of September 30, 2024, total expenses were $168.1 million, a slight increase from $166.8 million in 2023. Key factors influencing expenses include:
- A $2.8 million decrease in property operating expenses due to reduced reimbursable projects.
- A $1.2 million increase in real estate taxes attributed to new acquisitions.
- A $3.7 million increase in depreciation and amortization primarily due to new property acquisitions.
Liquidity and Capital Resources
As of September 30, 2024, DEA reported approximately $31.2 million in cash and cash equivalents, with $250.3 million available under its revolving credit facility. The company anticipates using these resources for:
- Property acquisitions
- Development activities
- Tenant improvements
- Debt repayments
Future Outlook
DEA's focus remains on acquiring properties that are essential to government functions, with a strategic plan for future growth through acquisitions and developments. The company expects to continue its trajectory of stable income generation through its established relationships with government agencies.
| Property Type | Number of Properties | Leased Square Feet | Annualized Lease Income (in millions) |
|---|---|---|---|
| Wholly Owned U.S. Government Leased | 85 | 9,330,122 | $335.1 |
| Joint Venture Properties | 10 | — | — |
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Resources:
- Easterly Government Properties, Inc. (DEA) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of Easterly Government Properties, Inc. (DEA)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View Easterly Government Properties, Inc. (DEA)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.