"Easterly Government Properties" Q2 2026 Earnings Call - Core FFO Growth Beats Long-Term Targets, Guidance Raised, and $1.5B Pipeline Primed for Deployment

Conference Call Operator: Greetings. Welcome to the Easterly Government Properties second quarter 2026 earnings conference call. At this time, all participants are on a listen only mode. After the speaker’s presentation, there will be a question and answer session between the company’s research analyst and Easterly’s management team. To ask a question during the session, the analysts will need to press star one one on their telephone. They will then hear an automated message advising their hand is raised. Please be advised that today’s conference is being recorded. I would now like to hand the conference over to your speaker today, Cole Bardawill, Director of Investor Relations. Please go ahead.

Cole Bardawill, Director of Investor Relations, Easterly Government Properties: Good morning. Before the call begins, please note that certain statements made during this conference call may include statements that are not historical facts and are considered forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Although the company believes that its expectations as reflected in any forward-looking statements are reasonable, it can give no assurance that these expectations 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 the company’s control, including, without limitation, those contained in the company’s most recent Form 10-K filed with the SEC and in other SEC filings. The company assumes no obligation to update publicly any forward-looking statements.

Additionally, on this conference call, the company may refer to certain non-GAAP financial measures such as funds from operations, core funds from operations, and cash available for distribution. You can find a tabular reconciliation of these non-GAAP financial measures to the most comparable current GAAP numbers in the company’s earnings release and separate supplemental information package on the investor relations page of the company’s website at ir.easterlyreit.com. I would now like to turn the conference call over to Darrell Crate, President and CEO of Easterly Government Properties.

Darrell Crate, President and CEO, Easterly Government Properties: Thanks, Cole. Good morning, everyone. This quarter, we delivered year-over-year Core FFO per share growth of 5.4%. As many of you know, this is above our 2%-3% stated long-term growth target, and we are pleased and achieved these results by executing our strategy of growing earnings steadily, allocating capital thoughtfully, and improving the quality of the portfolio over time. While the current interest rate environment hasn’t improved, driven in part by the volatility of geopolitical conditions that we’re currently facing, our business moves forward steadily in periods like this, as evidenced by our improved earnings guidance. We own facilities that support essential government missions, leased to critical federal agencies, high credit state and municipal tenants, and defense related companies. These leases are long duration and backed primarily by the full faith and credit of the U.S. government.

We continue to communicate to investors that we are clearly differentiated from traditional office real estate. Many of our facilities include secure, purpose-built environments where sensitive government work is conducted. They are mission-specific, difficult to replicate, and essential to the agencies they serve. For example, we recently visited our U.S. District Courthouse in Charleston, South Carolina. The building sits at the city’s historic four corners of law, physically connected to the adjoining Federal Judicial Center, deeply embedded into both the operations of the federal judiciary and the fabric of downtown Charleston. It’s a clear example of the tenant stickiness that runs throughout our portfolio. Facilities that are integral to the missions they serve and the communities they anchor. Turning to the quarter, the portfolio continues to perform well. Occupancy stood at 98%, and our weighted average lease term stands at 9.2 years.

Both of these key metrics compare quite favorably to our office REIT peers, each reflects the quality of our assets, the mission-critical work happening inside them, and the durability of the portfolio’s cash flows. During the quarter, we closed a new five-year term loan facility. Allison will cover the details, I’d note that in a selective lending environment, we executed efficiently and on attractive terms. We view that as a reflection of how lenders see the business. High-quality cash flows derived from government-backed income, supporting a disciplined, strong balance sheet. As part of our growth plan, we also continue to have ongoing conversations with the rating agencies, we look forward to updating you on our progress as we work toward an additional investment-grade rating in 2027.

Turning to our cost of capital, our shares have performed well year-to-date, the improvement supports our ability to grow. As our equity continues to rerate, reflecting the quality and consistent growth of our FFO relative to peers, we will be able to harvest more opportunities across our $1.5 billion pipeline. Even at current levels, we’re beginning to see opportunities to fund external growth on an accretive basis. As the stock price improves, more of that pipeline meets our return thresholds. We’ve spent the last several years building this pipeline, we will hopefully look to begin converting it in the coming quarters. Based on our continued operational performance and successful capital markets execution, we are raising our full-year Core FFO per share guidance range. The increase reflects the strength of our business and our confidence in delivering another year of steady growth against our stated objectives.

We continue to remain focused on disciplined execution, prudent capital allocation, and creating long-term value for our shareholders. As we look ahead, we couldn’t be more excited about the opportunities in front of us. Over the past several years, we’ve remained focused on executing our strategy, strengthening the portfolio, and positioning the company for consistent long-term growth. We’re encouraged to see that that execution increasingly reflected in our market valuation, we believe we remain in the early innings of unlocking the value embedded within our platform. We appreciate the dedication of our team and the continued support of our tenants and shareholders, we look forward to building on this momentum through the rest of the year. With that, I’ll turn the call over to Allison.

Allison, Chief Financial Officer, Easterly Government Properties: Thanks, Darrell, and happy Monday, everyone. I’m pleased to report the financial results for the second quarter of 2026. The underlying growth of the business continues to come through clearly in the numbers. Total revenue for the quarter was $92.4 million, up from $84.2 million in the second quarter of 2025. That’s an increase of 10% year-over-year, and it was driven by several factors. The acquisitions and development we’ve completed over the past 12 months, lease renewals, and TI and BSAC income coming online. EBITDA grew alongside revenue, coming in at $58.4 million for the quarter versus $54.3 million in the second quarter of 2025, approximately 8% growth. Importantly, that growth is reaching the bottom line on a per share basis. For the quarter, net income was $0.07 per share on a fully diluted basis.

FFO per share was $0.78, up from $0.74 in the prior year. Core FFO per share as well came in at $0.78, up from $0.74 in the prior year. That is approximately 5% growth year-over-year for both metrics. Finally, cash available for distribution for the quarter was approximately $25.8 million. In terms of our active development projects, all three continue to progress nicely. Our FDLE lab facility in Fort Myers, Florida, the U.S. Courthouse in Flagstaff, Arizona, and the U.S. Courthouse in Medford, Oregon, are all advancing, and we’re confident these will be high quality, mission critical additions to the portfolio once delivered. We initially broke ground on our FDLE lab facility in August of 2025, and our team and development partners have done an excellent job executing against the construction timeline and keeping the project on track with delivery later this year.

Our net debt to annualized quarterly EBITDA currently stands at 7.3 times, down from the first quarter as we continue to make steady progress towards our deleveraging targets. As our development projects advance, agreed upon lump sum reimbursements will provide a natural source of deleveraging, followed by incremental EBITDA growth as projects are delivered and lease revenues commence. These factors are an important step towards our medium term leverage objectives and our pursuit of additional investment grade ratings, which we believe will enhance access to attractively priced debt capital and support future pipeline funding. The term loan was an excellent outcome for the company. We secured a new $200 million unsecured facility with a five-year maturity and a $50 million accordion feature at pricing that was better than we initially had anticipated for a comparable long-term capital solution.

With an initial spread of 130 basis points over SOFR, we believe the financing reflects both the continued strengthening of the business and the quality of the relationships we’ve built with our lending group. We used the proceeds to pay down our revolving credit facility, which increased our available liquidity and provides additional capacity to fund future growth opportunities. With the successful closing of the term loan during the quarter, we are raising our full year Core FFO per share guidance range by $0.01 at the midpoint from $3.09-$3.10, resulting in a revised full year range of $3.07-$3.13. Despite a challenging interest rate environment, our portfolio continues to perform better than expected, supporting confidence in our earnings outlook for the balance of the year.

At the midpoint, our guidance assumes that we will have $50 million-$100 million of gross development related investment during the year and $50 million in wholly owned acquisitions. We continue to maintain a $1.5 billion acquisition and development pipeline, and with the recent improvement in our share price, we believe we are approaching an inflection point where we can begin to unlock opportunities from that pipeline in a meaningful way over the coming quarters. We remain focused on disciplined capital allocation, maintaining the strength of our tenant relationships, and advancing opportunities across our development and acquisition pipeline. Consistent execution in these areas continues to support the resilience of our cash flows and positions us to create long-term value for shareholders. Thank you for your time this morning. We appreciate your partnership and look forward to updating you on our progress.

With that, I will now turn the call back to Shannon.

Conference Call Operator: Thank you. As a reminder to the analysts, to ask the question, you will need to press star 11 on your telephone. Please stand by while we compile the Q&A roster. Our first question comes from the line of Seth Bergey with Citi. Please proceed with your question.

Seth Bergey, Analyst, Citi: Hi, good morning, thanks for taking my question. I just wanted to dig in a little bit more on kind of the acquisition pipeline, and reaching kind of an inflection point as your share prices have moved upwards. How should we just think about kind of the cadence of maybe starting to unlock some of those opportunities as we move and think of the back half of the year and into next year?

Darrell Crate, President and CEO, Easterly Government Properties: I think as Allison says, we’re really approaching a level where, again, getting dollars put to work at a sort of 100 basis point premium to our cost of capital is achievable. Seth, as we’ve spoken, our company’s small, so the great news is that it doesn’t take much for us to be able to make a material difference. Mike IB and Chris Wang have been developing, managing, nurturing, cultivating, this $1.5 billion pipeline for the last couple of years as we’ve continued to execute on our growth strategy successfully. We will find things that are able to pop out of that if the stock at $24.50-$25.50 gets us into a nice range where we have some opportunity to work some nice transactions. At $26, $27, you can start seeing material movement being a couple hundred million bucks of solid growth.

At $28, $29, $30, I think we could see very material acquisition volume, well in excess of anything that we’ve done historically. The optimism is bred by what’s within our control today and what we know we can execute on. For us to continue to grow forward, as we all know, Allison won’t let me release 2027 earnings guidance. As we continue to look to move forward, I’m very confident that we have the resources to continue to deliver our long-term growth target to investors.

Seth Bergey, Analyst, Citi: Thanks. Then maybe just a quick follow-up on that, last quarter you announced mezzanine financing opportunities. Just of the $1.5 billion, is there any color you can kind of give around maybe some of the size of those deals, and then how much would be development opportunities versus acquisitions or any additional mezzanine financing you’d look to do?

Allison, Chief Financial Officer, Easterly Government Properties: I think we shared last quarter. Seth, by the way, I think we shared last quarter that the program could grow to be somewhere between $30 million-$50 million, and that is still the target that we’re working towards today. Certainly, that pipeline includes additional mezzanine financing opportunities. Many are in the final stages of lease procurement, so our participation in them would be contingent on those lease awards being made. As we’ve shared before, there’s another batch of particularly VAs coming off the pipeline, we expect the acquisition activity there and the mezzanine financing activity there to accelerate over the coming years.

Darrell Crate, President and CEO, Easterly Government Properties: Yeah. Maybe for some folks who may not be aware, our mezzanine program, since we announced that as part of our earnings growth strategy, to say we’ve been flooded with opportunities, would maybe even be an understatement. Our discipline out of those is really just to provide mezzanine financing with developers and folks who we know are trusted and are known to us. In particular, have buildings that we’d want to have as part of our portfolio. It’s a very nice bridge as our cost of capital continues to improve, both on the equity side and the debt side, to be close to some projects that we think can be very accretive to the portfolio over the long term.

Seth Bergey, Analyst, Citi: Great. Thank you.

Conference Call Operator: Thank you. Our next question is from Michael Lewis of Truist Securities. Please proceed with your question.

Michael Lewis, Analyst, Truist Securities: Thanks. Allison, you didn’t mention any need for equity when you talked about getting into your target leverage range. Darrell did talk about equity a little on a question about acquisitions, how accretive it would be at certain levels. I was just wondering, how do you think about your cost of equity? Do you look at NAV? Is it really just more of matching it up with acquisitions and making it accretive? How do you kind of value the cost of equity in the stock?

Allison, Chief Financial Officer, Easterly Government Properties: Sure. It’s a few points. I would say, first and foremost, we primarily match equity against acquisition capital. That timing may not always be a perfect science. As you saw, we raised some equity in Q2. That was to fund the acquisition from Q1. That equity was raised at a higher price than we underwrote the deal at. We’re really pleased with how that was matched. In terms of the impact of leverage and equity combined, we see a natural de-leveraging path with just the development deliveries that we have. With that, there’s not a need to raise additional equity in order to meet those targets, though we are mindful of all of our goals in concert with each other, and we will make the best decision, both from an accretion perspective, a leverage perspective, and all in relative and relation to NAV as well.

Michael Lewis, Analyst, Truist Securities: Okay, great. My second question, the Loma Linda mortgage matures next summer, $127.5 million at 3.6%. I know it’s early. Is there any sense of how you’ll recapitalize that and maybe what the cost could be?

Allison, Chief Financial Officer, Easterly Government Properties: Sure. As Darrell has shared, and we’ve shared over a couple of calls, we believe that we are on a path to an investment-grade rating. An investment-grade issuance would be our primary goal in terms of refinancing that mortgage. As you know, we prefer to be an unsecured borrower, that would make a very attractive cost of capital on an unsecured basis. That being said, and while we won’t stand still, we have ample capacity on the revolver now, take it on, until we find the most attractive long-term debt capital solution. That’s assuming we don’t do anything but stand still, we could certainly take it on the revolver.

Darrell Crate, President and CEO, Easterly Government Properties: Yeah. Obviously it’s a quarterly conference call. As we’re looking ahead, we’ve been doing a significant amount of planning around 2027, 2028, 2029, understanding the leases that are going to make a big difference there, trying to get the structure of those leases in a way that we think will be most favored by the public markets. On the debt side, Allison did a fabulous job getting these term loans in place. As we look out at our refinancings and we see the opportunities in the debt markets, I think that we are planning well ahead in order to absorb, refinance, and continue to be on the growth path that we’ve articulated, again, which is strong 2%-3% of growth consistently over the long term.

We think we could even step that up if we get our ratings and continue to move forward.

Michael Lewis, Analyst, Truist Securities: Okay. Lastly from me, we noticed a little bit higher maintenance CapEx this quarter. Was just wondering if there was anything like one-off or any reason for that.

Allison, Chief Financial Officer, Easterly Government Properties: No. We had some very fortunate weather in the spring, as you can imagine, Q1 tends to be a little light with the winter weather. This quarter was very active in terms of the external facing projects, things like roofs or parking lots or HVAC equipment that sits exterior to the building. We are still anticipating that our full-year general range of $1.50-$2 a square foot will be the plan for the year, there’s obviously some seasonality in the numbers as well.

Michael Lewis, Analyst, Truist Securities: Okay, great. Thank you. Appreciate it.

Conference Call Operator: Our next question is from John Kim of BMO Capital Markets. Please proceed with your question.

John Kim, Analyst, BMO Capital Markets: Thank you. I want to ask about your billion and a half acquisition and development pipeline and how that has evolved from the last time you provided that update. Did the window close on some of these transactions and new ones have entered that pool? If you could maybe comment on the rationale for passing up on some of the opportunities during the quarter.

Darrell Crate, President and CEO, Easterly Government Properties: I think the pipeline continues to remain surprisingly stable given its size. There are seller expectations. I think we’re a very good buyer for a bunch of reasons. Many of the folks who own these buildings, the idea of having the opportunity to do some more tax planning with us relative to others, I don’t think they feel like the market is in a place where they need to sell right now, so there isn’t that level of urgency. We do continue to probably rotate, I’m going to say, $100 million-$200 million of opportunity within that pipeline within the quarter. There’s one deal that we did end up passing on. I think we were in a place, it was a fine building. It wasn’t a building that was a have-to-have for us. It was probably 60-75 basis points above our cost of capital.

We decided to pass on that as we have very strong earnings growth right now. We’re positioning ourselves for next year. We’re very excited to continue to execute on what we’re identifying with some really terrific opportunities.

John Kim, Analyst, BMO Capital Markets: Of those potential opportunities that you may close on the next few months or I guess for the remainder of the year, can you provide some commentary on what that looks like between GSA and government adjacent assets or maybe more state level investments? How much of that is acquisitions versus development opportunities?

Darrell Crate, President and CEO, Easterly Government Properties: Yeah. I think we’re seeing some GSA assets that we’re excited about, and they’re sort of at the forefront of what we’re doing. Our hope is, again, if we could control the world, we’d probably do half GSA and half sort of in the alternative bucket. We know our goal is to get to 30% of the portfolio being either in state, local, or government adjacent. Why is that number important? The number’s important because those have escalators of 2%-3%. The idea of adding 60-90 basis points to our same store growth rate, we think positions the portfolio very nicely relative to peers. We believe the stability of our cash flows, the mission critical nature of our buildings, should put us at a premium to those businesses. As I’ve said on prior calls, our portfolio is outstanding.

Of the buildings that we have, the duration of the leases, the quality of the cash flow, the occupancy, the tenancy. I think what we’re really working on is packaging those cash flows in a way, and that means packaging as in obtaining the lowest cost of capital. It means giving a growth rate that’s strong to investors. It’s creating a tremendous level of cushion in the dividend, and giving us that reinvestment opportunity. All of which I think should make us comp out relative to peers in a way that gives us a multiple on the stock that can be just very attractive to our investors and to potential sellers of buildings.

John Kim, Analyst, BMO Capital Markets: How are you thinking about dispositions as a funding source? Potentially because they may have re-leasing risk on the road or due to the focus on keeping your average portfolio age young versus peers.

Darrell Crate, President and CEO, Easterly Government Properties: I think it’s all of those things. To be very candid about it, and I know we’ve shared this with you a little bit in the past. These last two, three years, Allison, myself, the team, Nick Nimerala, and the whole asset management team have really cleared up any of the fog or lack of clarity that’s around the portfolio. We’ve got a lot of conviction of where we are. We will look at things on a case-by-case basis, and sometimes we’re really working to find efficiencies. Even if we have a high-quality building, but maybe it’s a loner, and away from the other asset management resources that are really working for us, that might be a reason to sell. You’re not going to see a significant portfolio turnover for us to go and raise cash to grow.

We continue to work and develop relationships with joint venture partners. I think we’re optimistic that our stock price is going to get into a good place, and we can continue to harvest the pipeline. That said, pivoting toward the end of this year, the beginning of next year, if that’s not going to be the case, we can work on joint ventures with folks with more attractive cost of capital, because we are the chosen partner of the U.S. government. We’re the largest landlord to the U.S. government. We’re working very closely from top to bottom with the GSA and with the other agencies. We understand what they need, and we are helping them become more efficient, and we’re working on their most important quality buildings in order to be a good partner.

All of that said, for us to go find money that’s either in the U.S. or around the globe that wants to invest in these very high-quality assets, that essentially deliver double A plus rent streams. We’re a partner of choice for somebody, so we don’t have a concern about not having the cost of capital when we need it in order to grow the company. As I said, our company’s tiny today, in that with it being worth $1 billion-$2 billion, to grow that in a way that’s competitive to peers, does not take a tremendous amount of good luck or for things to blow our way. We’re still in a place and a size where we can control that growth and deliver it to shareholders with consistency.

John Kim, Analyst, BMO Capital Markets: Great. Thank you.

Conference Call Operator: Thank you. Our next question is from R.J. Milligan of Raymond James. Please proceed with your question. R.J. Milligan, your line is open. Please check your mute button.

R.J. Milligan, Analyst, Raymond James: Yep. Thank you. I just wanted to maybe follow up on the investment pipeline question and maybe ask it a little bit differently, based on your comments that more things are starting to pencil, I’m just curious if there’s a mix component to that of, is it that more development deals are starting to pencil and we should expect if you guys announce more investment activity, that we’d see it on the development side, or is it acquisitions? I’m just curious, at different levels and different pricing, should we expect a different mix of investment activity?

Darrell Crate, President and CEO, Easterly Government Properties: I think there’s nothing that’s completely discernible other than there are two dynamics that are happening. One, in the development world, you can see that we’re finding these veins of advantage. You’d see it with courthouses. We’re building one in Flagstaff, we’re building one in Medford. We’re good at this. We know how to work with the government, and we know how to make their process more efficient. Courts are prickly animals. You can develop a definable edge in that space as a developer. Because pleasing the judges, pleasing the various agencies that are in those buildings is a skill. You’re seeing advantage there. In Florida, I think that we’ve done a terrific job with this FDLE business. Florida is a fast-growing state.

Their law enforcement is important to them, they have other facilities that need to be built, we’d be thrilled to be the state of Florida’s partner in order to do that. On the acquisition side, it’s a little trickier. Again, I can’t say enough that our small denominator, being a smaller company, is really our friend because we can continue to find opportunities in buildings where we have an advantage as a buyer because we’re a long-term holder of product. What does that mean? That means that if there are buildings that may not be well-suited to be flipped in five years by an institutional buyer, but they’re core to what we do, we’re going to be able to get those at an attractive price.

Those buildings like that, I’ve got them in my head, so maybe I’m not describing them with words on the call as clear as I’d like to. Those buildings pencil for us where we are, and those are with very high-quality agencies where we have a terrific relationship. I think that puts us in some good stead, and we hope that we can get a couple of those in the next nine months.

R.J. Milligan, Analyst, Raymond James: Great, thank you. Just a separate question here. This is more modeling, but any update on the expected FAA move-out expected in October?

Allison, Chief Financial Officer, Easterly Government Properties: We, at this point, know they will stay through at least the end of the lease term. Their notice provisions have expired, so they will be there definitely through the end of October. We’re hoping for a better update on their moving process over the next month or so. These operations aren’t always as streamlined in terms of moving as you and I might be moving in our own homes. We should have an update for you. They have historically had a bit of a move-out on time challenge. We’re optimistic that they may stay a little bit longer, but we don’t have anything concrete to share.

Darrell Crate, President and CEO, Easterly Government Properties: Maybe just to punch that right down. I would not add additional revenue in your model at this time. We do know they will stay to the end of the term. We may be able to share some. It’s either going to be status quo or we’re going to have a little optimism to share with you on our next call.

R.J. Milligan, Analyst, Raymond James: Excellent. Thanks, guys.

Conference Call Operator: Thank you. Our next question is from Michael Carroll of RBC Capital Markets. Please proceed with your question.

Michael Carroll, Analyst, RBC Capital Markets: Yep, thanks. Darrell, I wanted to circle back on your comments on your investment pipeline and your, I guess, the ideal mix, I believe you said was 50% GSA type buildings and 50% alternative type assets. Can you kind of give us an idea of, are the cap rates the same for those two types of buildings? I know the alternatives have the lease bumps, or how should we think about the pricing ranges of those types of properties?

Darrell Crate, President and CEO, Easterly Government Properties: Yeah, no, it’s a great question, and it really is case by case. We’re looking at some of these development deals with escalators. Thus, the individual opportunities are, they are complicated. Some of them we can find an advantage and really are excited to get that capital put to work. Then on acquisitions, again, it’s finding unique circumstances where our cost of capital gets us to a point where we can get a high-quality building. When I say 50-50, what I mean is we’re working on opportunities equally that are acquisition and development. How it actually shakes out in a set of ways doesn’t matter. Volume does matter.

Our long-term growth targets, getting to that 3% number is very important, and we feel like we have the resources, not only with the existing portfolio, the lease renewals, all the good work that we have done to get things buffed up and ready and predictable. In addition to where our cost of capital is today and with regard to this very large pipeline that we continue to navigate, we’re going to get to a place where I think our long-term goals are achievable.

Michael Carroll, Analyst, RBC Capital Markets: Circling back to your comments about potentially accessing the JV market, I guess if you don’t want to issue equity to fund some of these deals. Are you in discussions with potential JV type funds that wanted to invest with you guys to buy some of these properties?

Darrell Crate, President and CEO, Easterly Government Properties: We maintain a series of those relationships, and we’ve continued to develop them over the last 6 months. As we look forward, I think that we’ve always had a very large sovereign wealth fund who’s been a very good partner. We found some other folks who nicely complement that. As we have a broader range of properties that we’re interested in, I think we can appeal to a wider range of tastes and preferences as we work with folks. I can say, clearly, obviously, we’ve been at this for the better part of 15 years. We are one of the largest in the space, and we understand not only the commercial part of real estate but how government works.

If you’re a JV partner and this is exposure that you want in your portfolio, we do make it an easy choice for them. We’ll continue to cultivate those relationships. Also, given the order of magnitude of the pipeline that we’re developing, we don’t need to be a ball hog about it. We can be a very good partner with some JVs as well as doing things on our own, and continue to grow the business in a way that I think is going to be pleasing to investors.

Michael Carroll, Analyst, RBC Capital Markets: Okay. With these JV type investments, is it more of a one-off type deal with specific JV partners, or could you create, or would you want to create more of a fund type business to kind of actively grow that relationship to buy new assets?

Darrell Crate, President and CEO, Easterly Government Properties: I think a fund is a little sort of more formal. With the VAs, we had a program with our JV partner where we ended up putting close to $600 million-$700 million of assets in that entity. That was a terrific program for them and filled a need, and it’s something that we do well. Thinking about, again, I don’t think. When you say one-off, that doesn’t feel like what’s accurate because it’s really a waste of everybody’s time to build the level of relationships that we’re looking to have with JV partners. We’re not coming up with a building and auctioning it off. These are partners who I think are excited to be in this space. We want to do something that’s fairly programmatic and consistent over time.

That also said, to be an investment-grade issuer, we would like to have more than $300 million of debt that we’re issuing every year. That is also achievable, and in the context of trying to drive volume, especially as cost of capital gets a little bit better. We’ll weigh all of that as factors in how we decide to execute.

Michael Carroll, Analyst, RBC Capital Markets: Okay, great. Thank you. Appreciate it.

Darrell Crate, President and CEO, Easterly Government Properties: Yeah. Thank you. Appreciate it.

Conference Call Operator: Our next question is from Merrill Ross of Compass Point Research & Trading. Please proceed with your question.

Merrill Ross, Analyst, Compass Point Research & Trading: Hi. Good morning. I wonder if you have an update on the lease expirations aside from the FAA. I know they’re pretty light for this year, but are you starting to look towards next year? I guess they peak in 2028, though you may dilute that with growth, but it becomes more meaningful the further out you go. I’m just wondering if any update, kind of more in the near term, but are you starting to look towards the intermediate?

Allison, Chief Financial Officer, Easterly Government Properties: Yeah. Hi, Merrill. Thanks for the question. We are in the happy stages of procurement for upcoming expirations going through much of 2027. Procurements have kicked off for many, if not all. We are actively participating in those. We hope to share a little bit more progress as we get closer to those completions. We’re not expecting anything out of line with our currently forecasted renewal expectations, mid to high teens net effective rent growth, about $35 a square foot TI and BSAC on average. That being said, I know you mentioned that we’ve got a lot in 2028. We’re generally about 5% of expirations any given year, and if you look at 2030, the golden year for all of us, there’s less than 1%.

That’s going to be a very happy year to talk about on earnings calls because I don’t know what we’ll talk about. That’ll be hopefully something else pretty cool. We’re underway, and hope to share some more progress in Q3.

Darrell Crate, President and CEO, Easterly Government Properties: Yeah. I’d just say, to put some color around it, Allison’s done a tremendous job of putting more organization and discipline around getting these procurements going. It’s been a broad executive team effort to work more closely with the government, figure out DOGE was our friend in this respect because it did open people’s eyes to having a more fresh look on how they process things. We have very important buildings to them. The reality being, they should be renewing these leases. We’ve done a very good job as a landlord. These are mission critical facilities, we shouldn’t be wasting a lot of time dickering around with the leases and getting to a place where we can streamline a process where the American taxpayers are getting a fair deal, our shareholders are getting fairly compensated for their capital.

Everybody from our elected officials to the folks at the agencies, to the GSA, to us, nobody disagrees with that framework. Getting that to move more smoothly has been an effort, Allison’s absolutely done her part with the team internally to post up to the agencies, the government, and the elected officials in a way that I think everybody’s pleased with how it’s going.

Merrill Ross, Analyst, Compass Point Research & Trading: Yeah. Great job, Allison. I always appreciate you.

Conference Call Operator: Thank you. I would now like to turn the conference back to Darrell Crate, President and CEO of Easterly Government Properties, for closing remarks.

Darrell Crate, President and CEO, Easterly Government Properties: Great. Well, thanks everybody for joining us for this conference call. We’re very pleased with how the portfolio continues to move forward. As you know, we’re executing on this long-term growth plan. It is terrific to see the team continue to do their work. I’d really just like to thank our new shareholders and folks who’ve been with us also for quite some time. Thank you for your support and confidence, and we really look forward to continuing to deliver strong growth to you in the coming quarters and years.

Conference Call Operator: This concludes today’s conference call. Thank you for participating. You may now disconnect.