BMO Capital analyst John Kim maintained a Sell rating on Easterly Government Properties (DEA – Research Report) today and set a price target of $12.00.
John Kim has given his Sell rating due to a combination of factors affecting Easterly Government Properties. The company has been actively acquiring properties, including those with non-GSA tenants, which has led to an increase in leverage and a higher CAD payout ratio. While the core FFOps guidance for 2025 has been raised slightly, it remains below market expectations, indicating potential challenges in meeting financial targets.
Additionally, the company’s net debt to EBITDA ratio has increased, reflecting higher financial leverage. Although DEA has improved its financial flexibility by extending debt maturity and increasing borrowing capacity, the pressure from expiring leases and the need to adjust its dividend policy to retain capital for future investments are concerns that contribute to the Sell rating.