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Easterly Government Properties (DEA)
NYSE:DEA
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Easterly Government Properties
(NYSE:DEA)
68Neutral
Positive Factors
Acquisition Strategy
Improving cost of capital could kickstart DEA's acquisition-driven growth strategy, potentially leading to renewed growth through acquisitions.
Financial Performance
DEA's 3Q24 results were encouraging, as it included a Core FFOps beat.
Guidance and Forecasts
The company introduced 2025 guidance above the Street, driven by increased investment activity.
Negative Factors
Lease Expiry Risk
12 leases representing 593ksf remain expiring, posing a risk for future occupancy.
Leverage and Debt
Net debt/EBITDA increased to 7.9x, indicating higher leverage.
Tenant Uncertainty
There is uncertainty surrounding the impacts of potential cuts suggested by Elon Musk and Vivek Ramaswamy, which could affect DEA's largest tenant, the Department of Veteran Affairs, and other federal agencies.
Easterly Government Properties (DEA) vs. S&P 500 (SPY)
Market Cap
$1.14B
Dividend Yield10.03%
Average Volume (3M)1.67M
Price to Earnings (P/E)57.7
Beta (1Y)0.92
Revenue Growth4.60%
EPS Growth-5.17%
CountryUS
Employees50
SectorReal Estate
Sector Strength73
IndustryREIT - Office
Share Statistics
EPS (TTM)0.18
Shares Outstanding107,970,560
10 Day Avg. Volume1,216,226
30 Day Avg. Volume1,671,951
Financial Highlights & Ratios
PEG RatioN/A
Price to Book (P/B)N/A
Price to Sales (P/S)3.73
Price to Cash Flow (P/CF)11.50
P/FCF Ratio12.90
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$11.50Price Target Upside8.49% Upside
Rating ConsensusHold
Number of Analyst Covering4
Easterly Government Properties Business Overview & Revenue Model
Company DescriptionEasterly Government Properties, Inc. is a real estate investment trust (REIT) that focuses on the acquisition, development, and management of Class A commercial properties that are leased to U.S. Government agencies. The company's portfolio primarily consists of high-quality assets that serve as mission-critical facilities for federal agencies, ensuring stable occupancy and long-term leases. With a strategic emphasis on properties leased to the federal government, Easterly Government Properties offers investors a unique opportunity to invest in a steady income-generating real estate sector.
How the Company Makes MoneyEasterly Government Properties makes money primarily through leasing its portfolio of properties to U.S. Government agencies on long-term leases, which provide a stable and predictable rental income. The company's revenue model is driven by rental payments from these government leases, which often include built-in rent escalations, ensuring growth in revenue over time. Additionally, the company may engage in strategic acquisitions and developments of new properties to expand its portfolio and increase its rental income. Key revenue streams include base rent, expense reimbursements, and potential gains from property sales. The company's focus on federal government tenants reduces credit risk and enhances the stability of cash flows.
Easterly Government Properties Financial Statement Overview
Summary
Easterly Government Properties shows consistent revenue growth and healthy profit margins. The balance sheet is stable with a manageable debt-to-equity ratio. Cash flow management is proficient with sustained free cash flows, although net income remains relatively low.Income Statement
Easterly Government Properties has shown consistent revenue growth over the years, with a notable increase from $287.2 million in 2023 to $302.1 million in 2024. The company's gross profit margin and net profit margin are healthy, reflecting efficient cost management and profitability. EBIT and EBITDA margins have also improved significantly, indicating strong operational performance. However, the net income remains relatively low, which could be a point of concern.75
Positive
Balance Sheet
The balance sheet is stable, with a moderate debt-to-equity ratio reflecting manageable leverage. The equity ratio is strong, indicating a solid capital structure with sufficient equity backing. Return on equity has shown positive trends, but the company should monitor debt levels to avoid potential risks associated with high leverage.70
Positive
Cash Flow
Easterly Government Properties exhibits robust cash flow performance, with positive operating and free cash flow figures. The operating cash flow to net income ratio suggests efficient cash generation relative to earnings. Although there was a significant increase in investing cash outflows, the company has managed to sustain its free cash flow levels, indicating prudent financial management.80
Positive
| Breakdown | ||||
| Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|
| Income Statement | Total Revenue | |||
| 302.05M | 287.23M | 293.61M | 274.86M | 245.08M | Gross Profit |
| 200.98M | 184.80M | 195.93M | 187.74M | 169.52M | EBIT |
| 176.53M | 66.39M | 76.26M | 73.22M | 55.09M | EBITDA |
| 179.34M | 158.79M | 181.19M | 163.85M | 148.89M | Net Income Common Stockholders |
| 20.58M | 18.20M | 31.47M | -8.85M | -23.52M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | |||
| 19.35M | 9.38M | 7.58M | 11.13M | 8.46M | Total Assets |
| 3.22B | 2.88B | 2.83B | 2.83B | 2.46B | Total Debt |
| 1.05B | 1.29B | 1.25B | 1.21B | 978.26M | Net Debt |
| 1.03B | 1.29B | 1.24B | 1.20B | 969.79M | Total Liabilities |
| 1.84B | 1.47B | 1.42B | 1.38B | 1.16B | Stockholders Equity |
| 1.32B | 1.32B | 1.24B | 1.28B | 1.15B |
| Cash Flow | Free Cash Flow | |||
| 162.63M | 114.48M | 196.03M | 481.39M | 145.20M | Operating Cash Flow |
| 162.63M | 114.48M | 125.94M | 118.34M | 145.20M | Investing Cash Flow |
| -409.64M | -127.01M | -69.10M | -363.04M | -290.18M | Financing Cash Flow |
| 252.88M | 17.19M | -59.71M | 250.17M | 144.10M |
Easterly Government Properties Technical Analysis
Negative
10.60
Price Trends
10.76
Negative
11.20
Negative
11.93
Negative
Market Momentum
-0.07
Negative
48.41
Neutral
53.32
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For DEA, the sentiment is Negative. The current price of 10.6 is below the 20-day moving average (MA) of 10.64, below the 50-day MA of 10.76, and below the 200-day MA of 11.93, indicating a bearish trend. The MACD of -0.07 indicates Negative momentum. The RSI at 48.41 is Neutral, neither overbought nor oversold. The STOCH value of 53.32 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for DEA.
Easterly Government Properties Risk Analysis
Easterly Government Properties disclosed 70 risk factors in its most recent earnings report. Easterly Government Properties reported the most risks in the “Finance & Corporate” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Easterly Government Properties Peers Comparison
Overall Rating
UnderperformOutperform
Sector (61)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
78 Outperform | $401.58M | 65.99 | 1.94% | 6.85% | 19.87% | 81.71% | |
72 Outperform | $2.59B | 67.26 | 2.04% | 6.00% | 5.27% | 58.15% | |
68 Neutral | $1.14B | 57.73 | 1.44% | 10.03% | 4.60% | -5.17% | |
63 Neutral | $686.42M | 56.31 | 7.10% | 8.05% | 1.22% | ― | |
61 Neutral | $4.70B | 17.65 | -3.00% | 11.43% | 5.99% | -19.07% | |
60 Neutral | $11.77B | 748.67 | 0.23% | 5.79% | 4.10% | -92.47% | |
55 Neutral | $3.14B | 31.10 | 4.27% | 6.84% | -0.98% | -32.02% |
* Real Estate Sector Average
Performance Comparison
DEA
Easterly Government Properties
10.60
0.21
2.02%
BXP
Boston Properties
67.19
7.36
12.30%
GOOD
Gladstone Commercial
14.98
2.39
18.98%
HIW
Highwoods Properties
29.64
6.22
26.56%
LXP
LXP Industrial Trust
8.65
0.28
3.35%
PSTL
Postal Realty
14.28
1.00
7.53%
Easterly Government Properties Earnings Call Summary
Earnings Call Date: Feb 25, 2025 | % Change Since: 0.47% | Next Earnings Date: May 6, 2025
Earnings Call Sentiment Positive
The earnings call presented a positive outlook with strong core FFO growth, strategic acquisitions, and successful lease renewals, despite challenges related to deferred maintenance liabilities and potential government spending cuts. Financial management actions such as debt restructuring and interest rate swaps provide stability and flexibility.Highlights
Core FFO Growth
Core FFO per share grew 3% year over year in Q4 2024, reaching $0.29. For the full year, core FFO met the upper end of guidance at $1.17.
Successful Lease Renewals
Renewed a 33,000 square foot firm term lease for the US Army Corps of Engineers, with 95% of the portfolio comprised of firm term leases.
Strategic Acquisitions and Expansions
Closed ten new assets in 2024, expanding the portfolio and leasing to investment-grade government-adjacent tenants like Northrop Grumman.
Pipeline and Guidance for 2025
Raised 2025 core FFO guidance to a range of $1.18 to $1.21, assuming $100 million in fully owned acquisitions and $25 million to $75 million of gross development-related investment.
Debt Management and Financial Flexibility
Amended a $100 million senior unsecured term loan agreement, extending maturity to 2028 with options to extend to 2030, alongside an interest rate swap for greater rate exposure certainty.
Lowlights
Deferred Maintenance Liabilities
Federal government buildings hold over $80 billion in deferred maintenance, a 57% increase from five years earlier, highlighting challenges in government real estate management.
Potential Impact of Government Spending Cuts
Concerns about potential delays in government requisitions and spending cuts, particularly affecting external growth and government-adjacent properties.
CapEx and Tenant Improvement Costs
Higher CapEx and tenant improvement costs are expected, driven by government-adjacent leases, impacting CAD growth relative to FFO growth.
Company Guidance
During the Easterly Government Properties Fourth Quarter 2024 Earnings Conference Call, the company provided robust guidance and highlighted several key metrics. The company reported a net income per share of $0.05 for the quarter and $0.19 for the year, while core funds from operations (FFO) per share grew by 3% year-over-year, reaching $0.29 for the quarter and $1.17 for the year, hitting the upper end of their raised guidance. Cash available for distribution was noted at $25.1 million for the quarter and $100.9 million for the year. Easterly also mentioned the successful delivery of 3% earnings growth attributed to an expanded total addressable market, including 10 new assets acquired in 2024. Looking forward, the company raised the bottom end of its core FFO guidance for 2025 to a range of $1.18 to $1.21 per share, assuming $100 million in fully owned acquisitions and $25 million to $75 million in gross development-related investment. The company remains optimistic about its strategic initiatives, including extending a $100 million senior unsecured term loan maturity to 2028, with options to further extend to 2030, and entering into an interest rate swap to mitigate rate exposure.Easterly Government Properties Corporate Events
Private Placements and FinancingBusiness Operations and Strategy
Easterly Government Properties Enhances Financial Stability with Loan Amendment
Positive
Jan 14, 2025
On January 14, 2025, Easterly Government Properties, Inc. announced an amendment to its senior unsecured term loan agreement, initially executed in 2016. The Ninth Amendment extends the loan’s maturity date to January 28, 2028, with potential extensions up to 2030, and increases the borrowing capacity from $150 million to $250 million. This strategic move, facilitated by the company’s strong banking relationships and superior credit profile, enhances its financial stability and supports its disciplined investment strategy. Additionally, Easterly has implemented an interest rate swap to fix the SOFR rate, providing greater certainty over interest rate exposure.
Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.