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Easterly Government Properties (DEA)
NYSE:DEA
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Easterly Government Properties
(NYSE:DEA)
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Rating:57Neutral
Price Target:
$24.50
â–²(7.22% Upside)
Action:ReiteratedDate:02/24/26
The score is driven primarily by steady but mixed fundamentals: improved 2025 cash generation and resilient top-line performance are offset by materially weaker net profitability and meaningful leverage. Technicals are modestly supportive but not strongly bullish, while valuation is a headwind due to a very high P/E despite an attractive dividend yield. The earnings call reinforces a stable outlook with modest FFO growth guidance, tempered by leverage and government-related uncertainty.
Positive Factors
Mission‑critical government tenancy
A 97% occupancy rate and ~10‑year weighted lease term provide durable, predictable cash flows with low counterparty credit risk given federal tenants. This stability supports reliable FFO and dividend capacity over multi‑year horizons and underpins leasing resilience versus private‑sector office demand.
Improved operating and free cash flow (2025)
Material cash‑flow improvement enhances debt service ability and funding for development/acquisitions without immediate equity raises. Sustained higher OCF/FCF increases financial flexibility to support dividends, deleveraging plans, and selective accretive investments over the next several quarters.
Proven renewal execution and acquisition pipeline
Consistent 14% renewal spreads and long renewal terms demonstrate pricing power in mission‑critical assets and recurring upside on lease roll. Combined with a cited acquisition/development pipeline, this supports repeatable, low‑risk growth and margin expansion via accretive asset deployment over multiple years.
Negative Factors
Elevated cash leverage
A 7.5x net debt leverage ratio leaves limited balance‑sheet cushion and raises refinancing and interest‑rate sensitivity risk. Until leverage approaches target levels, capital allocation and growth will be constrained and refinancing at higher costs could pressure future FFO and dividend sustainability.
Compressed net profitability and low ROE
Declining net margins and persistently low ROE signal limited bottom‑line conversion of revenue and constrained value creation on the capital base. This structural profitability weakness reduces excess cash for growth or deleveraging and limits long‑term earnings resilience amid rising costs or slower rent growth.
Exposure to federal budget and agency funding risks
Concentration in federal tenants creates structural sensitivity to government budget cycles and agency cutbacks. Even mission‑critical demand can face timing and funding uncertainty, potentially delaying occupancy, reimbursements, or planned agency expansions and impacting multi‑quarter revenue visibility and capital deployment cadence.
Easterly Government Properties (DEA) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$1.06B
Dividend Yield9.58%
Average Volume (3M)460.21K
Price to Earnings (P/E)73.2
Beta (1Y)0.31
Revenue Growth11.02%
EPS Growth-30.91%
CountryUS
Employees50
SectorReal Estate
Sector Strength53
IndustryREIT - Office
Share Statistics
EPS (TTM)0.10
Shares Outstanding46,318,714
10 Day Avg. Volume622,887
30 Day Avg. Volume460,211
Financial Highlights & Ratios
PEG Ratio-1.98
Price to Book (P/B)0.72
Price to Sales (P/S)2.83
P/FCF Ratio3.67
Enterprise Value/Market Cap2.07
Enterprise Value/Revenue6.52
Enterprise Value/Gross Profit13.24
Enterprise Value/Ebitda10.85
Forecast
1Y Price Target
$23.50Price Target Upside2.84% Upside
Rating ConsensusModerate Sell
Number of Analyst Covering3
EPS Forecast (FY)0.49
Revenue Forecast (FY)$347.14M
Easterly Government Properties Business Overview & Revenue Model
Company DescriptionEasterly 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).
How the Company Makes MoneyEasterly Government Properties generates revenue primarily through long-term leases with U.S. government agencies, which provide a stable and predictable income stream. The company typically enters into lease agreements that are structured to align with the federal government's budget and operational needs, often resulting in leases that span several years. Key revenue streams include rental income from these leases, which are often backed by the full faith and credit of the U.S. government, thus reducing default risk. Additionally, DEA may engage in property development and management services, allowing it to capitalize on value-add opportunities within its portfolio. Significant partnerships with federal agencies and a focus on acquiring properties in strategic locations further enhance its earning potential.
Easterly Government Properties Earnings Call Summary
Earnings Call Date:Feb 23, 2026
(Q4-2025)
| % Change Since: |
Next Earnings Date:May 05, 2026
Earnings Call Sentiment Positive
The call emphasized durable, mission-critical portfolio characteristics, steady operational metrics (97% occupancy), and repeatable core FFO growth (nearly 6% Q4 and ~3% full-year) alongside active development progress and a disciplined acquisition strategy. Key near-term challenges include an elevated cash leverage ratio (7.5x) that management expects to reduce, and external uncertainty from federal budget/headline risks that could affect timing of opportunities. Management conveyed confidence in the pipeline and balance sheet actions to support continued execution.Q4-2025 Updates
Positive Updates
High Portfolio Occupancy and Lease Duration
Portfolio occupancy near historical highs at 97% and a weighted average lease term of roughly 10 years, supporting stable and predictable cash flows.
Quarterly and Full-Year Core FFO Growth
Core FFO per share grew nearly 6% year-over-year in Q4 to $0.77 and grew nearly 3% year-over-year for the full year to $2.99, demonstrating execution on the stated growth target.
2026 Core FFO Guidance
Maintained full-year 2026 core FFO per share guidance of $3.05 to $3.12, implying approximately 3% core FFO per share growth at the midpoint (above the stated 2%-3% target range midpoint).
Strong Cash Available for Distribution
Cash available for distribution of $29.1 million in Q4 and $118.0 million for the full year, reflecting steady operational performance.
Accretive Virginia Acquisition
Completed a three-asset acquisition in Virginia for $44.5 million (~298,000 RSF) with the Commonwealth of Virginia as the primary tenant, 2.5% annual rent escalations, a weighted average lease term of 7.5 years, and a going-in cash cap rate of ~11%; transaction described as immediately accretive to returns.
Development Pipeline Progress and Deliveries
Major development milestones include delivery of FDA Atlanta (completed Dec 15, 2025) with $138.1M in lump-sum reimbursements received as of 12/31/2025 (plus an additional $12.6M received subsequently and ~ $3M expected soon). Broke ground on State Crime Lab in Fort Myers (delivery targeted 2026); Flagstaff U.S. Courthouse under construction (delivery 2027); Medford U.S. Courthouse construction commenced (delivery 2027). Combined upcoming projects represent ~200,000 rentable square feet of high-credit cash flows.
Strong Renewal Execution
Since IPO, 38 leases renewed totaling ~2.6 million RSF; of these, 27 renewals required no tenant improvement (TI) or TI completed, 11 with pending TI. Excluding certain assets, average rent spread on renewals was ~14% with a weighted average renewal term of 15.7 years.
Pipeline and Acquisition Opportunity Set
Management cites an active acquisition and development pipeline (cited as approximately $1.0 billion) and a larger pipeline referenced in discussion, with the team focused on sourcing assets that provide spreads in excess of cost of capital.
Balance Sheet and Leverage Management
Cash leverage (net debt to annualized quarterly EBITDA) stands at 7.5x and management expects reimbursements and execution to drive improvement toward a medium-term objective of ~6x, supporting lower funding costs and potential investment grade positioning.
Disciplined Capital Allocation and Growth Philosophy
Company reiterates a repeatable strategy of 2%-3% core FFO per share annual growth, prioritizing mission-critical, high-credit tenancy, disciplined underwriting (targeting returns >100 bps above WACC), and selective development/acquisition to balance durability and growth.
Negative Updates
Elevated Reported Cash Leverage
Current cash leverage is 7.5x (net debt to annualized quarterly EBITDA), above the company's medium-term objective of ~6x, representing an elevated leverage profile that management is working to reduce via reimbursements and balance sheet actions.
Government Funding and 'Headline' Risks
Analyst discussion highlighted notable agency budget reductions and uncertainty (examples cited during Q&A: FBI, DEA, IRS, EPA, Forest Service, USDA cuts), and management acknowledged ongoing headline risks such as Doge, budgeting/shutdown concerns and broader government efficiency initiatives that could create near-term uncertainty despite long-term demand for mission-critical facilities.
Conservative Near-Term Acquisition Deployment Assumptions
2026 guidance assumes modest wholly owned acquisitions (~$50 million) and $50M–$100M gross development-related investment despite a large stated pipeline; management is exercising selectivity to achieve attractive spreads to cost of capital, which may limit near-term deployment if suitable opportunities are scarce.
Company Guidance
Management maintained 2026 full‑year core FFO per share guidance of $3.05–$3.12 (≈3% core FFO/share growth at the midpoint and consistent with the 2–3% annual target), with the midpoint driven by delivery of FDA Atlanta, renewal execution and efficiencies; guidance assumes $50M–$100M of gross development‑related investment and $50M of wholly‑owned acquisitions, and management cited a deal pipeline of roughly $1.0B–$1.5B. Recent operating and balance‑sheet metrics that underpin the outlook include Q4 cash available for distribution of $29.1M and full‑year CAD of $118.0M, Q4 core FFO/share of $0.77 (+~6% YoY) and FY core FFO/share of $2.99 (+~3% YoY), current cash leverage (net debt/annualized quarterly EBITDA) of 7.5x (expected to decline as reimbursements arrive) and a medium‑term leverage objective of ~6.0x. Additional datapoints discussed were a recent $44.5M, ~298k SF Virginia acquisition at a ~11% going‑in cash cap rate, development deliveries totaling ~200k rentable SF underway, FDA Atlanta reimbursements of $138.1M received (plus $12.6M more and ~ $3M expected), and renewal execution history of 38 leases covering ~2.6M SF with an average renewal rent spread of ~14%, weighted average renewal term of 15.7 years and estimated TI of $37.14/SF.Easterly Government Properties Financial Statement Overview
Summary
Financial statements point to a stable but not high-growth profile. Revenue has been resilient and gross margins remain strong, and 2025 operating/free cash flow improved materially. Offsetting this, net margins have compressed significantly and leverage remains meaningful with modest cash-flow coverage of total debt, reducing earnings quality and balance-sheet flexibility.Income Statement
Revenue has grown steadily over time (2023 dip followed by acceleration in 2024–2025), indicating resilient demand. Profitability is mixed: gross margins are consistently strong (~64%–68%), but net margins have compressed meaningfully (from ~11% in 2021–2022 to ~4% in 2025) and net income is volatile, which lowers earnings quality and visibility. EBITDA margins are high in the data set, but the drop in bottom-line profitability is the key concern.58
Neutral
Balance Sheet
Leverage is material but not extreme for a REIT: debt-to-equity generally sits around ~0.85x–1.21x, improving in 2025 versus 2024 as total debt declines. Equity has remained relatively stable while assets have grown, which supports balance-sheet durability. The main weakness is persistently modest returns on equity (low-to-mid 1% range in 2023–2024, ~2%+ in 2021–2022), suggesting limited value creation relative to the capital base.52
Neutral
Cash Flow
Cash generation improved sharply in 2025, with operating cash flow rising to ~$259M from ~$163M in 2024 and free cash flow growing as well, which is a clear positive for funding dividends and debt service. However, cash flow coverage of total debt is modest and trending weaker in 2025 versus prior years (coverage ratio down to ~0.19), implying refinancing/interest-rate sensitivity remains a risk despite better cash generation.65
Positive
| Breakdown | Dec 2025 | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 |
|---|---|---|---|---|---|
Income Statement | |||||
| Total Revenue | 336.10M | 302.05M | 287.23M | 293.61M | 274.86M |
| Gross Profit | -3.11M | 200.98M | 184.80M | 195.93M | 187.74M |
| EBITDA | 201.91M | 179.34M | 161.52M | 181.19M | 163.85M |
| Net Income | 13.00M | 19.55M | 18.80M | 31.47M | 30.06M |
Balance Sheet | |||||
| Total Assets | 3.38B | 3.22B | 2.88B | 2.83B | 2.83B |
| Cash, Cash Equivalents and Short-Term Investments | 23.37M | 19.35M | 9.38M | 7.58M | 11.13M |
| Total Debt | 1.68B | 1.60B | 1.29B | 1.25B | 1.21B |
| Total Liabilities | 2.01B | 1.84B | 1.47B | 1.42B | 1.38B |
| Stockholders Equity | 1.32B | 1.32B | 1.32B | 1.24B | 1.28B |
Cash Flow | |||||
| Free Cash Flow | 259.19M | 162.63M | 114.48M | 125.94M | 481.39M |
| Operating Cash Flow | 259.19M | 162.63M | 114.48M | 125.94M | 118.34M |
| Investing Cash Flow | -285.29M | -409.64M | -127.01M | -69.10M | -363.04M |
| Financing Cash Flow | 31.92M | 252.88M | 17.19M | -59.71M | 250.17M |
Easterly Government Properties Technical Analysis
Positive
22.85
Price Trends
22.49
Positive
21.79
Positive
21.59
Positive
Market Momentum
0.04
Positive
48.37
Neutral
3.70
Positive
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For DEA, the sentiment is Positive. The current price of 22.85 is below the 20-day moving average (MA) of 23.27, above the 50-day MA of 22.49, and above the 200-day MA of 21.59, indicating a neutral trend. The MACD of 0.04 indicates Positive momentum. The RSI at 48.37 is Neutral, neither overbought nor oversold. The STOCH value of 3.70 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive 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
UnderperformOutperform
Sector (65)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
65 Neutral | $2.17B | 12.19 | 3.79% | 4.94% | 3.15% | 1.96% | |
57 Neutral | $1.06B | 73.21 | 0.93% | 9.58% | 11.02% | -30.91% | |
51 Neutral | $937.62M | -6.00 | -4.45% | 6.09% | -1.23% | 9.10% | |
51 Neutral | $543.59M | -2.82 | -19.60% | 17.55% | -5.52% | 40.27% | |
46 Neutral | $193.71M | -9.94 | -13.43% | 4.14% | 3.10% | -900.13% | |
46 Neutral | $1.14B | -8.24 | -10.10% | 4.01% | -11.04% | -58.49% |
* Real Estate Sector Average
DEA
Easterly Government Properties
22.85
-2.79
-10.89%
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2.18
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PDM
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7.51
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2.60%
BDN
Brandywine Realty
3.12
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-24.89%
JBGS
JBG Smith Properties
15.15
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3.94%
OGCP
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5.56
-2.86
-33.97%
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
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.