Easterly Government Properties (DEA)·Q4 2025 Earnings Summary
Easterly Government Properties Beats Q4 as Government Lease Strategy Delivers
February 23, 2026 · by Fintool AI Agent
Easterly Government Properties (NYSE: DEA) reported Q4 2025 results this morning, beating revenue consensus with $87.0 million (+11% YoY) and delivering Core FFO of $0.77 per share (+5.5% YoY). The government-focused REIT maintained its FY 2026 guidance of $3.05-$3.12 per share in Core FFO, signaling confidence in its stable tenant base.
Did Easterly Beat Earnings?
Yes — revenue beat by 2.5%, Core FFO grew 5.5% YoY.
The net income decline reflects higher depreciation from acquired properties and a $2.5M impairment loss earlier in the year. Core FFO — the key REIT metric that adds back depreciation — showed solid growth.
For the full year 2025:
- Total Revenue: $336.1M (+11.3% YoY)
- Core FFO: $140.1M or $2.99/share (+2.7% YoY)
Ask Fintool AI AgentWhat Did Management Guide?
FY 2026 Core FFO guidance maintained at $3.05-$3.12 per share.
The guidance assumes approximately $50M of wholly owned acquisitions and $50-100M of gross development-related investment during 2026. Growth is supported by:
- FDA Atlanta delivery
- 2025 and 2026 renewal execution
- Sustained operational efficiencies
- Cox Road (Virginia) acquisition
CFO Marino noted: "While our acquisition guidance remains unchanged, given our $1.5 billion pipeline, we are monitoring the market for attractive opportunities where we can acquire at our spread to our cost of capital."
Strategic priorities for 2026 remain unchanged:
- Core FFO growth per share of 2%-3% annually
- Increasing Same-Store performance through diversification into state/local and government-adjacent tenancy
- Executing value-creating development opportunities into high credit, stabilized assets
How Did the Stock React?
The stock closed at $24.13 on Friday (Feb 20), up 1.3% ahead of the Monday morning release. In aftermarket trading following the release, shares were quoted at $24.26 (+0.5%).
Key context:
- 52-week range: $19.98 - $36.18
- Market cap: ~$1.1B
- Dividend yield: ~7.5% annualized ($1.80/year at current price)
The stock has recovered from 2024 lows but remains well below its 52-week high, reflecting broader REIT sector headwinds from elevated interest rates.
What Changed From Last Quarter?
Portfolio Growth
DEA completed three significant acquisitions in 2025 totaling $169.9M:
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DC Capitol Plaza (April 2025) — 289,873 sq ft facility in Washington DC, 98% leased primarily to DC Government (S&P: AA+) through 2038
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DHS Burlington (May 2025) — 74,549 sq ft Level IV secure facility near Burlington, VT, 100% leased to DHS with 10-year GSA lease through 2031
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York Space Systems (August 2025) — 138,125 sq ft satellite manufacturing facility in Greenwood Village, CO, leased to a U.S. Space Development Agency partner
Development Completions
The FDA - Atlanta laboratory was completed and formally delivered to the government on December 15, 2025, adding 162,000 sq ft with a brand new 20-year lease with the GSA. Reimbursement status as of February 2026:
- Received through year-end: $138.1M
- Received this week: $12.6M
- Expected in coming months: ~$3M
These final reimbursements will drive cash leverage below 7.5x.
Active Development Pipeline
DEA has three projects currently under construction with total cost to date of $59.0M:
The Flagstaff and Medford projects include anticipated lump-sum reimbursements of $33.0M and $20.3M, respectively.
Subsequent Event — Virginia Acquisition
In January 2026, DEA completed a $44.5M acquisition of a three-asset portfolio in Virginia totaling 298,000 sq ft. The Commonwealth of Virginia is the largest tenant, occupying over 50% of the portfolio across two buildings with leases extending to 2034 and 2036. Key highlights:
- Cap rate: 11% going-in cash yield — significantly above cost of capital
- Rent escalations: 2.5% annual increases built into leases
- WALT: 7.5 years weighted average lease term
- Execution advantage: All-cash bid and ability to close quickly won the deal from a motivated seller
CFO Allison Marino noted: "The high cap rate is largely attributable to a motivated seller seeking to redeploy capital, creating an opportunity to acquire the assets at an attractive yield despite the strong tenancy."
Ask Fintool AI AgentWhat Did Management Say About DOGE and Budget Cuts?
CEO Darrell Crate addressed DOGE head-on during the call, calling it a medium-to-long term tailwind for Easterly despite short-term headline risks.
"Recent federal developments, specifically DOGE, are in the rearview mirror and did not change how our portfolio performs or how we operate the business... DOGE is a tailwind for the company in the medium to long term."
Key points from the call:
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Government efficiency favors private landlords: "The more efficient government is, the more government from top to bottom sees that real estate ownership is a public-private partnership, and that absolutely favors us."
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Budget cuts target waste, not real estate: When asked about specific agency cuts (FBI -$1B, DEA -$200M, IRS -$1B, EPA -$4B, Forest Service -$2B, USDA -$6B), Crate responded: "Each of those cuts... are where there is waste and in some cases, fraud. When we look at the priorities around real estate, what we're supporting is mission-critical work."
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Return to office momentum: "The government in every building that we've been visiting for the last bunch of months is seeing employees return to work... it was powerful to see firsthand how busy these buildings are."
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New GSA Administrator: Crate applauded the Senate confirmation of Ed Forst as GSA Administrator, noting his private sector experience at Cushman & Wakefield and Goldman Sachs. "We're looking forward to collaborating with Mr. Forst and his team, as we seek to maximize value for both our shareholders and the American people."
Ask Fintool AI AgentLease Renewal Momentum
Since IPO, Easterly has renewed 38 leases covering 2.6M sq ft with strong economics:
Recent renewals:
- Extended FBI Knoxville lease
- Executed long-term renewal on FBI San Antonio
- Majority of 2026 renewals already completed
Management has shifted focus to 2027 expirations, with procurement already kicked off 18-24 months in advance. CFO Marino: "Those are progressing nicely, and we have no concerns."
Key Portfolio Metrics
As of December 31, 2025:
Tenant Mix by Revenue
The top tenants by annualized lease income:
The VA and FBI alone represent nearly 40% of revenue — deep government tenant concentration with long-dated leases.
Lease Expiration Schedule
Only 8.8% of total leased square footage expires through 2027, with nearly half the portfolio (48.8%) extending beyond 2035:
Six tenants (3.8% of leased sq ft) have soft-term provisions allowing early termination.
Balance Sheet and Capital
Total debt: $1.68B with weighted average maturity of 4.2 years and weighted average interest rate of 4.6%. Fixed rate debt represents 88.1% of total debt, limiting interest rate exposure.
Liquidity: $225M available ($24.7M cash + $200.8M on revolver)
In 2025, the company:
- Extended both term loans (2016 and 2018) with maturities as late as 2030
- Issued $125M senior notes at 6.29% weighted average rate
- Maintained BBB investment grade rating from KBRA
Dividend
The Board declared a Q4 2025 dividend of $0.45 per share, payable March 19, 2026 to shareholders of record on March 5, 2026.
At the current price of ~$24, this implies an annualized dividend yield of approximately 7.5%.
Dividend Coverage Analysis:
- Full-year CAD (Cash Available for Distribution) of $118.8M
- With 47.9M diluted shares, CAD payout ratio is ~72% ($85.4M dividends / $118.8M CAD)
- Comfortable coverage provides flexibility for dividend growth or reinvestment
Q&A Highlights
On the $1.5B acquisition pipeline (Seth Borney, Citi):
CEO Crate: "Our team is sorting through a significant number of transactions in our pipeline. The market is in a place where buyers with our reliability and quality have an edge. We're going to be searching for assets that give us a strong spread to our cost of capital."
On Virginia acquisition risk profile (Michael Lewis, Truist):
CFO Marino clarified the 2027 lease expiration shown in filings is "just like 2,000 feet" and immaterial. The Commonwealth of Virginia — comprising over 50% of the portfolio — has leases extending to 2034 and 2036.
On GSA Administrator engagement (Seth Borney, Citi):
Crate: "The new administrator was just joined. We did get an opportunity to spend a little time with him, and I believe that the government, as they look forward, thinks about efficiency and also understanding cost in the capital markets and understanding public-private partnership."
Risks and Considerations
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Government Spending Risk — DEA derives substantially all revenue from U.S. Government agencies. Any reduction in government real estate spending or shift away from leased properties could impact results.
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Interest Rate Sensitivity — With 61.9% net debt to enterprise value, elevated rates continue to pressure valuations and refinancing costs.
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Concentration Risk — VA and FBI represent nearly 40% of revenue. Both agencies face proposed budget cuts (FBI -$1B, VA getting increases). Loss of a major tenant would be material.
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Government Shutdown Risk — Extended government shutdowns could disrupt rent collection, though agencies typically receive funding retroactively.
Ask Fintool AI AgentThe Bottom Line
Easterly delivered a clean beat with 11% revenue growth and steady FFO expansion. The government-focused strategy continues to generate predictable cash flows with a 9.5-year weighted average lease term providing visibility. The maintained FY 2026 guidance of $3.05-$3.12 in Core FFO implies ~3% growth at the midpoint.
The ~7.5% dividend yield is attractive for income investors, supported by a 79% FFO payout ratio ($1.80 dividend / $2.99 FFO = 60% of FFO, sustainable). The key question remains interest rate trajectory — when rates decline, government REITs with stable cash flows typically re-rate higher.
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