Darrell Crate
About Darrell W. Crate
Darrell W. Crate, 58, is DEA’s President and Chief Executive Officer (CEO) since September 2024 and January 2024, respectively; he has served as a director since February 2015 and was Chairman of the Board from 2015–2023. He holds a BA from Bates College and an MBA from Columbia Business School; prior roles include CFO of Affiliated Managers Group (AMG) and Managing Director at Chase Manhattan . In 2024, DEA reported net income of $20.6 million and Core FFO of $126.9 million ($1.17 per fully diluted share) with 97% occupancy, while annualized total shareholder return (TSR) measured at $66 vs peer group’s $97; leverage improved to 7.1x Adjusted Net Debt/annualized pro forma EBITDA .
Past Roles
| Organization | Role | Years | Strategic Impact |
|---|---|---|---|
| Affiliated Managers Group (NYSE: AMG) | Chief Financial Officer | 1998–2011 | Led finance at a global asset manager; positioned for growth and capital markets access |
| Chase Manhattan Corporation | Managing Director, Financial Institutions Group | Pre-1998 | Focused on investment management firms; London/New York coverage |
| Romney for President | Treasurer, Exec. Committee | 2008 & 2012 | Senior campaign financial oversight |
External Roles
| Organization | Role | Years | Strategic Impact |
|---|---|---|---|
| Easterly Capital, LLC | Founder; holds various titles | Founded 2009 | Platform for real asset investing; contributed properties at IPO |
| Easterly Asset Management (formerly Easterly Partners Group) | Managing Principal | Since 2015 | Institutional asset management leadership |
Fixed Compensation
| Metric | 2022 | 2023 | 2024 |
|---|---|---|---|
| Base Salary ($) | $525,000 | $575,000 | $800,000 |
| Pay Ratio (Median Employee/CEO) | N/A | N/A | 29:1 |
Notes: As an employee-director, Crate receives no additional director compensation .
Performance Compensation
| Metric | Weighting | Threshold | Target | Max | Actual | Payout |
|---|---|---|---|---|---|---|
| Core FFO per share (fully diluted) | 50% of objective | $1.16 | $1.17 | $1.19 | $1.17 | 100% of objective tranche |
| Adjusted Net Debt / Annualized Quarterly Pro Forma EBITDA (Q4) | 50% of objective | 7.5x | 7.4x | 7.2x | 7.1x | 200% of objective tranche |
| Individual Subjective Criteria (leadership, IR, culture, execution) | 50% total bonus | — | 100% of target | — | Achieved | 100% of subjective tranche |
| Total 2024 Incentive Cash Bonus ($) | — | — | $1,400,000 target | $2,800,000 max | $1,750,000 earned | 125% of target |
Equity Ownership & Alignment
- Beneficial ownership: 661,479 shares; total shares and units beneficially owned 694,506; includes 33,027 earned and vested LTIP units .
- Pledging: 500,000 shares indirectly owned through Easterly Capital, LLC are pledged as collateral pursuant to IPO-era contractual rights; April 2025 waiver permitted increasing pledged shares by up to 125,000 shares (CEO) under limited conditions .
- Ownership guidelines: CEO required to hold ≥6x base salary; all officers/directors are in compliance .
- Anti-hedging/anti-pledging policy: Prohibits hedging and pledging absent Nominating & Corporate Governance Committee approval; legacy IPO rights and limited waivers disclosed .
Outstanding/Granted Equity Awards (2024 LTIPs)
| Award Type | Grant Dates | Target Units (#) | Vesting/Measurement |
|---|---|---|---|
| Service-Based LTIP Units | 1/2/2024 | 79,423 | Vest 12/31/2026; accelerated on termination without cause/good reason, death/disability |
| TSR Performance LTIP Units (Absolute TSR) | 1/2/2024 | 7,627 | 3-year performance to 12/31/2026; vest when earned |
| TSR Performance LTIP Units (U.S. Treasury Relative TSR) | 1/2/2024 | 8,307 | Same; forfeiture if <3% |
| TSR Performance LTIP Units (Equity REIT Index Relative TSR) | 1/19/2024 | 6,853 | Target at 55th percentile; forfeiture ≤35th percentile |
| TSR Performance LTIP Units (Office REIT Index Relative TSR) | 1/19/2024 | 13,707 | Same methodology |
| Operational Performance LTIP Units (Occupancy) | 1/2/2024 | 46,093 | 3-year average occupancy ≥94% to earn; vest when earned; cap at target |
Outstanding Awards and Value (12/31/2024)
| Category | Unvested Units/Shares (#) | Market/Payout Value ($) |
|---|---|---|
| Service-based (unvested) | 125,394 | $1,424,476 (at $11.36/share) |
| Performance-based (unearned/unvested) | 119,703 | $1,359,826 (at $11.36/share) |
Employment Terms
- No employment agreement; restrictive covenants include non-compete/non-solicit during employment and 12 months thereafter (non-compete not enforceable in CA; applicable to other executives) .
- Change-in-control (CIC) and termination provisions: Performance LTIPs are measured through CIC date with proration (if before final year); earned units remain subject to service vesting but fully vest upon termination without cause/for good reason within 18 months post-CIC; service LTIPs accelerate on termination without cause/for good reason, death or disability .
Potential Payments (as of 12/31/2024; CEO)
| Scenario | Performance-Based Awards ($) | Service-Based Awards ($) | Total ($) |
|---|---|---|---|
| Termination without cause/for good reason | $18,165 | $1,424,476 | $1,442,641 |
| Death/Disability | $18,165 | $1,424,476 | $1,442,641 |
| CIC (no termination) | — | — | — |
| CIC + termination without cause/for good reason | $569,189 | $1,424,476 | $1,993,665 |
Board Governance
- Board service history: Director since February 2015; Chairman 2015–2023; CEO since Jan 2024; President since Sep 2024 .
- Independence: Crate is not independent; DEA has an independent Chairman (William H. Binnie) and fully independent Audit, Compensation, and Nominating & Corporate Governance Committees .
- Committee roles: Crate is not listed as a member of the standing committees; Audit chaired by Tara S. Innes; Compensation chaired by William H. Binnie; Nominating & Corporate Governance chaired by Cynthia A. Fisher .
- Board activity: 8 Board meetings in 2024; all directors met ≥75% attendance; independent directors hold executive sessions after each regular meeting .
Dual-role implications: DEA expressly separated Chair and CEO roles in 2024 to strengthen independent oversight; this mitigates prior concentration when Crate was non-independent Chair, supporting governance best practices .
Director Compensation (Context; non-employee directors)
| Director | Cash Fees ($) | Equity ($) | Total ($) |
|---|---|---|---|
| W.H. Binnie | $100,000 | $114,989 | $214,989 |
| C.A. Fisher | $100,000 | $114,991 | $214,991 |
| S.D. Freeman | $75,000 | $114,991 | $189,991 |
| E.W. Henry, Jr. | $75,000 | $114,991 | $189,991 |
| T.S. Innes | $100,000 | $114,994 | $214,994 |
Notes: Chair retainers were $25,000 for committee chairs; employee directors receive no director pay .
Compensation Peer Group (Benchmarking)
DEA’s peer group (size-based, 0.5x–2.0x total capitalization) includes TRNO, CTRE, CDP, DRH, XHR, LTC, ELME, PDM, BDN; DEA does not mechanically target a percentile; FPC/FTI advised and confirmed competitiveness .
| Peer | Ticker | Equity Cap ($mm) | Total Cap ($mm) |
|---|---|---|---|
| Terreno Realty Corp | TRNO | 5,898 | 6,722 |
| CareTrust REIT, Inc. | CTRE | 5,067 | 5,464 |
| COPT Defense Properties | CDP | 3,547 | 5,989 |
| DiamondRock Hospitality | DRH | 1,885 | 3,065 |
| Xenia Hotels & Resorts | XHR | 1,589 | 2,942 |
| LTC Properties | LTC | 1,564 | 2,248 |
| Elme Communities | ELME | 1,344 | 2,043 |
| Piedmont Office Realty Trust | PDM | 1,135 | 3,357 |
| Brandywine Realty Trust | BDN | 970 | 3,206 |
Say‑on‑Pay & Shareholder Feedback
- 2024 say‑on‑pay showed strong support despite a proxy advisor’s negative recommendation tied to accelerated vesting of the former CEO’s time-based LTIPs upon retirement (industry practice) .
- Frequency of say-on-pay: Stockholders voted >97% in favor of annual votes (2024 meeting) .
Related Party Transactions (Potential Conflicts)
- Easterly Asset Management Operations LLC (EAM), controlled by Crate, provides IT and certain admin services; DEA paid ~$529,000 in 2024 and expects ~$537,000 in 2025; transactions governed by related-person policy with Audit Committee oversight .
Multi‑Year Compensation Snapshot (CEO)
| Year | Salary ($) | Stock Awards ($) | Non‑Equity Incentive ($) | Total ($) |
|---|---|---|---|---|
| 2022 | $525,000 | $1,264,946 | $832,500 | $2,622,446 |
| 2023 | $575,000 | $1,266,665 | $832,500 | $2,674,165 |
| 2024 | $800,000 | $2,065,428 | $1,750,000 | $4,625,303 |
Performance & Track Record (2024 highlights under Crate’s leadership)
- Portfolio/Operations: 97% leased; renewed 144k sf for 19.3 years avg term; 10 acquisitions for $230.0mm pro rata, expanding into mission-critical contractor and high-credit state/local tenants .
- Financials: Net income $20.6mm; Core FFO $126.9mm ($1.17/share) .
- Balance sheet: New $400mm revolver (accordion to $300mm), KBRA BBB/Stable, interest rate swaps executed .
- TSR context: $100 investment value at $66 vs peer $97 for 2024; peer group defined per CD&A .
Risk Indicators & Red Flags
- Pledging risk: CEO and Vice Chairman hold legacy contractual pledge rights; limited waivers in April 2025 increased permitted pledged shares (CEO +125k; Vice Chairman +750k); anti-pledging policy otherwise prohibits pledging without approval .
- Related-party services: EAM payments ($529k in 2024) warrant continued independent oversight .
- CIC acceleration: Double-trigger vesting within 18 months post-CIC can create payout optics; however, no single-trigger cash severance; no tax gross-ups .
- TSR underperformance vs peers in 2024 suggests market skepticism despite operational execution .
Compensation Structure Analysis
- Mix shifted higher to equity and performance-based pay in 2024; CEO’s total compensation rose with promotion and higher LTIP grants; over 80% of CEO pay is performance-based/at-risk .
- Objective bonus hurdles were tightened YoY; 2024 Core FFO and leverage goals exceeded targets, driving 125% payout .
- LTIP design emphasizes multi-factor TSR (absolute, REIT/Office relative, Treasury-adjusted) and occupancy; forfeiture floors increase rigor; service LTIPs have 3-year cliff vest .
Equity Ownership & Director Compensation Policies
- Minimum ownership requirements: CEO 6x salary; non-employee directors 5x cash retainer; compliant across covered individuals .
- Director program: $190k annual retainer ($75k cash, ~$115k equity) plus $25k for committee chairs; no meeting fees; employees receive no director pay .
Employment & Contracts (Retention/Transition)
- No employment contracts or cash severance; restrictive covenants apply; equity accelerates under specified terminations; CIC treatment uses performance measurement and double-trigger vesting for LTIPs .
Investment Implications
- Alignment: Strong ownership guidelines and pay-for-performance structure; rigorous bonus and LTIP metrics support long-term value creation in a government-anchored REIT model .
- Watch pledging and related-party exposure: Legacy pledge waivers and ongoing EAM payments introduce optics and potential selling pressure/credit line risks; monitor disclosures and committee oversight .
- Execution vs market: 2024 operational/financial goals achieved, but TSR lagged peers; if acquisitions, occupancy, and balance sheet strength persist, equity-linked incentives should motivate improvement; track Core FFO trajectory and leverage discipline .
- Governance: Separation of Chair/CEO and fully independent committees mitigate dual-role concerns; no gross-ups/single-trigger severance reduces unfriendly pay optics .