Easterly Raises Outlook as Core FFO Advances
Second-quarter revenue rose 9.7% to $92.4 million as rental income increased.
Easterly Government Properties (DEA), a real-estate investment trust focused on government-leased properties, raised its full-year outlook after Core FFO increased 8.0% to $37.4 million. Core FFO rose to $0.78 a share from $0.74 a year earlier.
The quarter extended a gradual sequential improvement in Core FFO, which edged up from $37.1 million, or $0.77 a share, in the first quarter and $36.8 million, or $0.77 a share, in the fourth quarter of 2024. Net income also rebounded from the preceding quarter, rising to $3.2 million, or $0.07 a diluted share, from $1.4 million, or $0.03 a share.
Revenue climbed to $92.4 million from $84.2 million a year earlier, led by an 11.6% increase in rental income to $89.7 million. Tenant reimbursements declined to $0.3 million from $1.9 million. Despite the higher revenue, net income fell 25.8% from $4.3 million a year earlier, while diluted earnings declined from $0.09 a share.
Higher financing and property costs tempered the improvement. EBITDA rose 7.6% to $58.4 million, while interest expense increased 7.7% to $20.4 million. Cash Available for Distribution fell 11.8% to $25.8 million as maintenance capital expenditures rose to $7.0 million from $3.7 million and deferred-revenue amortization increased.
Easterly's operating portfolio held at 106 properties and about 10.7 million leased square feet from the first quarter. Its weighted-average remaining lease term shortened to 9.2 years from 9.4 years, while the portfolio's weighted-average age increased to 17.1 years from 16.9 years.
The company now expects full-year Core FFO of $3.07 to $3.13 a diluted share, raising both ends of its outlook after increasing only the lower bound in the first quarter. The forecast assumes about $50 million of acquisitions and between $50 million and $100 million of gross development-related investment.
Easterly also shifted borrowings away from its revolving facility after arranging a $200 million term loan due in June 2031. Revolver borrowings fell to $43.1 million from $245.1 million at the end of March, while total debt remained about $1.7 billion. Adjusted net debt declined to 7.1 times annualized quarterly EBITDA from 7.3 times, and net debt fell to 58.4% of enterprise value from 62.5%.
The company issued 796,943 shares through its at-the-market program during the quarter, raising about $18.8 million, up from roughly $2.1 million in the first quarter. The term loan and equity issuance lengthened the weighted-average debt maturity to 4.0 years while holding the weighted-average interest rate at 4.6%.