Q4 2020 Easterly Government Properties Inc Earnings Call
Okay.
Greetings and welcome to the easterly government properties fourth quarter 2020 earnings conference call.
At this time all participants are in a listen only mode.
Question and answer session will follow the formal presentation.
If anyone should require operator assistance during the conference. Please press star zero on your telephone keypad.
As a reminder, this conference is being recorded.
And on my pleasure to introduce Lindsay Winterhalter, Vice President of Investor Relations. Thank you you may begin.
Good morning, So for the call begins please note the use of forward looking statements by the company on this conference call statements made on this call may include statements, which are not historical facts and are considered forward looking for.
The company intends. These forward looking statements to be covered by the safe Harbor provisions for forward looking statements contained in the private Securities Litigation Act reform its 1995 and is making the statements for the purpose of complying with those safe Harbor provision.
Although the company believes that its plans intentions expectations strategies and prospects as reflected in or suggested by those forward looking statements are reasonable. It can give no assurance that these plans intentions expectations or strategies will be attained or achieve.
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 item <unk> risk factors of its annual report on form 10-K for year ended December 31 2022.
To be filed with the SEC on February 24 2021.
And then its other SEC filings and risks and uncertainties related to the adverse impact of COVID-19 on the U S regional and global economies and the potential adverse impact on our financial condition and results of operations of the company.
The company assumes no obligations to update publicly any forward looking statements, whether as a result of new information future events or otherwise.
Additionally, on this conference call the company may refer to certain non-GAAP financial measures such as funds from operation funds from operations as adjusted 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.
Our debt easterly REIT dotcom.
I would now like to turn the conference call over to Darrell Crate chairman of easterly government properties. Thank.
Thank you Lindsey and good morning, everyone and thank you for joining us for this fourth quarter conference call.
Day. In addition to Lindsay I'm also joined by Bill Trimble, the company's CEO and Meghan <unk>, the company's CFO and COO.
We're pleased with our results for 2020.
Our acquisition targets furthered our development efforts successfully negotiated our anticipated renewals on the face of COVID-19, and its myriad of challenges.
Our portfolio has 79 properties up approximately 13% and seven 3 million square feet up approximately 12% as compared to last year.
The team has also done an impressive job in building our acquisition and development pipelines for 2021, which will enable us to deliver the consistent stable growth that our investors have come down anticipate from our young portfolio of mission critical facilities with leases backed by the full facing credit of the United States government.
As we look forward, we anticipate our long term return for our investors of 7% as measured by growth in <unk> and dividends paid we continue to target, 2% to 3% annual lesser gross per share coupled with a roughly 4% to 5% dividend yield as you know Easter.
Really are somewhat uniquely positioned relative to other Reits have insights into the long term steady growth potential of our portfolio.
We intend for investors to appreciate this consistency to continue to reward us with an attractive cost of capital.
In addition to enhancing our portfolio and forward opportunities in 2020, we continue to elevate our profile as a leader in important ESG metrics as you may recall, we founded our business in early private equity years, where the portfolio is buildings, many with platinum gold and silver lead.
Certification with the new by the administration, we will continue to work with the government to enhance the energy efficiency of our portfolio.
This is good for the environment and good for shareholders. It enhances our sustainability metrics, while also encouraging investment in our facilities.
As we also continue to focus on enhancing diversity on the board and at all levels in the organization.
Way that positions our business to be facing our clients the government and investors that is constructive progressive inconsistent with our times.
Lastly, I want to thank our management team and our board for their dedication and tireless effort. This year to enable us to deliver consistent results for our shareholders 2020 was a unique year and I'm proud of the way, we whether the challenge and I'm, particularly pleased with how we are positioned as the economy and the new administration move forward with that I will turn the call.
Over to Bill to give you insights into the 2020 results. Thanks, Darryl and good morning. Thank you for joining us for our fourth quarter earnings call I hope everyone. On this call is doing well as we enter year two of this pandemic in the United States.
Not hindered by the impacts from COVID-19, the acquisitions team was able to exceed guidance and closeout on another highly successful year with for grade additions for the company is growing portfolio in the fourth quarter of 2020.
These acquisitions were the Va's consolidated mail outpatient pharmacy, located in Charleston, South Carolina, one of seven Cmos in the country.
The health resources and services and administrations only facility devoted to the diagnosis treatment and research of Hansen's disease also known as leprosy located in Baton Rouge, Louisiana and the department of the interior regional facility located in billings, Montana and finally, the U S District Court for the Western District of Tennessee.
190 for U S District court located throughout the United States.
In total this makes nine accretive mission critical acquisitions totaling just over $250 million at a weighted average acquisition cap rate of six on a quarter for the year, we surpassed our acquisition guidance, while still maintaining discipline towards our bull's eye strategy.
When reflecting on our 2020 additions several themes hold true each.
Each property is either build to suit or renovated to suit for the underlying tenant agencies highly specific requirements for.
The location of this facility is strategically located in its geographic region to help fulfill the scope of the agencies broader mission and with a weighted average lease expiration year of 'twenty 32. All of these 2020 acquisitions have long term stability of cash flows with attractive opportunities for <unk>.
On lease renewal spreads well into the future.
As easterly continues on its growth trajectory, one thing becomes abundantly clear about the portfolio. It is only getting stronger with.
With 87% of the portfolio considered bullseye and each property, becoming a smaller relative percentage of total NOI, we continued to diversify away risk that might lie with any single asset we.
We have a portfolio that is stronger today than pre pandemic, which speaks to the underlying inherent value of these mission critical government leased assets the.
The strength of this portfolio with a strong ability to drive organic growth coupled with an incredibly strong pipeline of actionable bullseye opportunities sets the stage for sustainable future cash cash flow growth.
Our tenancy and the embedded growth opportunities within our portfolio differentiate easterly from any other office REIT or even net lease rates.
Rather than attempt to patient a whole DEA with lease net lease for office.
We're also we're just who we are unique in our tenants credit worthiness unique and our transparency of future cash flows are focused provider of infrastructure to enduring missions of the United States.
Turning to development 2020 marks the third consecutive year easterly has delivered a brand new state of the Ark, 100% leased facility for the beneficial use of the U S. Government. Most recently easterly has reached completion and commenced its new 20 year lease at the FDA Laboratory in Lenexa, Kansas The F D. A.
When ex the laboratory is now the newest regional laboratory for this highly important agency within the U S government.
We continue to remain on track to deliver the 162000 square foot FDA laboratory in Atlanta, Georgia in the first half of 2023.
Our team led by Mike IV, and Mark Bauer, our busy looking for other opportunities that fit our non speculative development pipeline that provides outsized accretion in addition to our acquisition opportunities.
Turning to leasing updates in the fourth quarter of 2020, we renewed the DEA field office located in a secure federal compound next door, our DEA lab, and the FBI and Dallas, Texas with a new 20 year lease that does not expire until 2041 the ask.
Net management team was able to achieve attractive re leasing spreads that are reflective of a typical bullseye renewal exercise les.
Later in the call Megan will go into more specifics on these lease renewals to date as well as the companys expectations with respect to upcoming lease rolls.
As we close our first year of this horrible pandemic I hope you take away that easterly government properties continues to execute well.
We execute on our focused acquisition strategy, we execute on our non speculative development and we execute on accretive renewals. We look ahead, the worst most probably behind us and are gratified to see a robust pipeline a team of asset managers, who are second to none and keeping our bill.
<unk> mission and growing in value.
And the opportunity for sustainable growth, regardless of the opaque outlook to confront so many other real estate sectors.
Thank you again for your time this morning, and with that I will turn the call over to Megan to discuss the quarterly and year end financial results.
Thank you Bill.
Everyone gives me great pleasure to post another strong quarter and close out a highly successful year here at easterly.
As with prior quarters, COVID-19 had no material negative financial impact on the organization as easterly received 100 per cent of rental income due from our tenants in the fourth quarter.
As of December 31, we owned 79 operating properties comprising approximately seven 3 million square feet on commercial real estate with one additional development project and design totaling approximately 162000 square feet.
In 2020, we acquired nine properties and sold one a roughly 33000 square feet square foot facility I know tie, California, while immaterial to the greater portfolio. We are pleased with the value achieved on sale. We chose to exit this border asset given the government changing needs in this region and our focus on keeping our portfolio pristine.
Through the acquisition of Newark facilities, and successful long term renewals at existing properties. The weighted average age of our portfolio remains young at 13, three years and the weighted average remaining lease term has never been higher in the history of our company at eight two years.
Maintaining a young portfolio age and a long weighted average remaining lease term provides us with future cash flow visibility and the opportunity for healthy dividend growth, while also retaining capital to reinvest into our highly accretive acquisition and development projects.
Turning to our quarterly results for the fourth quarter net income per share on a fully diluted basis plus three.
<unk> per share on a fully diluted basis was <unk> 32.
<unk> as adjusted per share on a fully diluted basis was <unk> 30.
And our cash available for distribution was $21 1 million.
For the year ended December 30, <unk> 2020, net income per share on a fully diluted basis for 15.
<unk> per share on a fully diluted basis was $1 26.
<unk> as adjusted per share on a fully diluted basis was $1 20, and our cash available for distribution was $89 4 million.
At $1 26 per share on a fully diluted basis is truly delivered at the upper end of its increased 2020 <unk> per share range and the result represents an impressive 5% growth rate year over year.
This growth coupled with a roughly four five per cent dividend yield we believe differentiate easterly for the year 2020 and is indicative of how easterly is exiting the U S pandemic stronger than it entered.
Turning to the balance sheet at quarter end. The company had total indebtedness of approximately $983 $4 million with $371 million available on our line of credit for future acquisitions and development related expenses.
As of December 31st easterly net debt to total enterprise value was 31 eight per cent and its adjusted net debt to annualized quarterly pro forma EBITDA ratio was at the bottom end of our stated range at six times with this low leverage level numerous sources of available debt capital access to equity sold on a forward.
Basis, and an attractive cost of equity, we are well poised to lean into future growth opportunities.
In the fourth quarter of 2020, the company issued approximately 849000 shares of its common stock through the company's ATM program raising net proceeds for the company of approximately $18 $6 million.
For the full year 2020 easterly issued approximately 7 million shares of its common stock through the company's ATM program at a net weighted average price of $22 93 per share raising net proceeds to the company of approximately $164 million raised.
Raising equity at such an attractive cost and on adjusted time basis contributed to our ability to drive meaningful earnings growth over the year.
Today, the company has approximately $4 1 million shares which are subject to unsettled forward sales transactions under the company's ATM program. Assuming these shares are physically settled in full at a net weighted average initial forward sales price of $25 66 per share.
The company expects to receive net proceeds of approximately $105 4 million.
Turning to our earnings guidance. The company is maintaining its previously issued 2021 <unk> per share on a fully diluted basis guidance in a range of $1 28 to $1 30.
The midpoint of this guidance is predicated upon completing $200 million on acquisitions and $25 million in gross development related investment in 2021.
Easterly remains on track to deliver 2% to 3% <unk> growth per share year over year, a percentage we are proud to provide to our shareholders through underlying U S government cash flow.
In closing and before I hand, the call back to the operator for questions I would like to spend some time on our re leasing successes.
As previously mentioned due to the unique nature of our leases final renewal rents cannot be ascertained until the exact amount of Ti dollars required by the government at renewal is known in the Ti work is complete.
As such there can be a lag in providing releasing data relative to the point at which we have signed a renewal lease.
As of December 31, 2020, we had executed three renewals for which the renewal Ti work was complete and accepted by the government.
These include the DEA, San Diego warehouse, our courthouse in El Centro and CVP, Chula Vista, which I'd note, we sold in May of 2019.
Average rent spread achieved achieved on these three renewals was 19%, including approximately $14 per square foot of Ti utilized by the government.
The average total renewal term for these three renewal leases was 13 years.
I can also share that we currently expect our single tenant bullseye properties that have renewed but for which the new lease has not yet commenced.
Or for which it has commenced the Ti has not yet been accepted by the government.
For realized an average renewal rent spread of 17% to 20%, including an estimated 35% to $40 per square foot of Ti to be utilized by the government.
This group of assets totaled 400000, rentable square feet and includes DEA, North Highland DEA, Riverside, FBI, Richmond, FBI, Albany, SA say Dallas <unk>.
S a San Diego.
Courthouse in Charleston, and our DEA Dallas office.
These eight properties each have renewed for total lease terms of 15 to 20 years with an average of $16 nine years.
In addition to these bullseye renewal since IPO, we have executed renewal options at VA Baton Rouge.
Charleston in U S T I S Lincoln.
We look forward to working with the GSA upon the exploration of these assets between the years 2020 for in 2025.
Finally, with over 900000 square feet and 15 leases expiring through the end of 2021. We are pleased to report we are making meaningful progress with the GSA and are in active discussions regarding all properties. At this time, we feel good about the long term mission and tenancy of these upcoming expirations as always we thank you for your commitment to our thesis on <unk>.
Appreciate your partnership as we continue to deliver for you. Please stay safe, everyone and with that I will turn the call back to the operator.
Thank you we will now be conducting a question and answer session.
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Our first questions come from the line of John Kim with BMO. Please proceed with your questions.
Thanks, Good morning, it looks like on a number of leases.
On the rent expiring in 2023 has increased from last quarter.
And I'm wondering if this was due to some.
2020 explorations that were just extended for that year.
Sure.
Yes, the primary driver of that John is our.
Our GSA lease and disclaim that lease was extended to 2023.
I think there were for leases in total so I mean, what the other extensions or was that part of the acquisition.
That was in part that's sorry, that's the largest driver of it.
When you look at.
The second.
Yes.
When you look let me, let me come back and I'll get you the itemized list of the other 2023.
But it is it's it's the leases at TSA Chicago.
So with the FAA on the USDA.
Bill on your prepared remarks, you characterize the pipeline as income.
Strong as far as your acquisition pipeline can you compare the pipeline today versus perhaps a quarter ago.
And since we acquired from recent assets I think in the low 6% cap rate range.
Has that expanded your your opportunities yeah as far as acquisitions.
Yeah sure. Good morning. The reason I've said is that we are saying.
Number of opportunities.
Particularly in the VA space that are coming on.
On line and these are brand new 20 year opportunities.
So there is an increase over what we saw last quarter. So that's why I've mentioned that we're also looking at some smaller portfolios that are out there and and.
So I would say that with the pricing right now on these assets.
I think the most important thing for investors to know is that with our terrific cost of capital thanks to Megan and the shareholders of our company.
We don't see a great deal of competition when we're looking for some of our pristine properties.
So I think we have.
<unk> opportunity than we've ever had to go out and do accretive acquisitions and I think it's also pointed if you look at our most recent acquisitions with long lease terms important missions beautiful new buildings, and so I think from a pipeline standpoint, we've never been more gratified with what we're seeing certainly for the next for next year.
And so why the conservatism on the on the guidance.
Well it's simple.
Although our market share from last year.
Well I think what you've always seen and I've tried to get this message across.
A certain amount of off market opportunities. We have every year and there are certain amount of marketing opportunities and it really is not in our interest to go out and buy $1 billion of properties, one year paid incredibly low cap rate because we'd be that elephant in the swimming pool driving the pricing out in front of us and setting a bar for all time.
We don't think is a good value.
<unk>.
I think you've seen we've been able to hit our numbers exceed them every year, I think where the steady Eddy people out there when we see an opportunity we grab it.
Something gets marketed it fits in our bullseye, we're going to buy so I think that's the important part I'd rather give you the good news.
And give you that steady long term growth rate, then go out and flashed around in a couple of quarters just too.
Just a pump earnings or pump the size of our buildings. So.
I think we're going to maintain our I think very prudent strategy going forward.
Okay I appreciate the color. Thank you.
Hey, Jon just to circle back.
The fourth is our new new acquisition.
Courthouse in Jackson that is technically 2023. It has an extension option. So I think of it as 2028.
Got it.
Thank you. Our next question is come from the line of Emmanuel Korchman with Citi. Please proceed with your questions.
Hey, everyone. Good morning.
Good morning.
Question for you why and maybe that's just a timing thing, but why did you choose to allow leverage to sort of ramp up rather than pulling on some of those equity.
Our forwards to better match from the large acquisitions either.
From a volume of acquisitions.
Yeah, I think it keeps us at that low level, we still keep the same flexibility.
But if you will that insurance on the balance sheet.
Yeah. It doesn't really change the way we approach 2021, and then when we expect to be able to stay well within at the bottom end of our range. So.
It's just a small shift up at the end of the quarter, but doesn't really change the outlook for next year.
And then bill going back to the acquisition market.
Maybe it would be helpful. For the call is have you discussed sort of the values that things are transpiring out that you're not buying so and then also remind us what your target range is.
Just so we have a better handle on whats going on in the market overall, Oh, absolutely and good morning.
So this year.
If you look at sort of a tale of two cities, we sort of came out on average at 625.
We really have traded in a fairly narrow range compared to other real estate since we got into this business back in 2010, so not a lot of dramatic moves I will say, though that when you look at what we think some of the more pristine buildings, we bought this year, which were brand new.
In some cases with 15 year leases.
We were seeing pricing closer to six or slightly below six caps, but you know when you look back at it.
One of our most beautiful facilities, which was Loma Linda the VA facility out there that was on thinking about a 582 cap when we bought that property and we didn't have the stock price. We have today and it was accretive then so I think the bigger takeaway for US is that the market is not moving faster than the attractiveness of our cost of capital and as long as they are accretive they fit our bolds.
And I mean reasonably accretive not just some measurable amount I think youre going to see us go out and have a very strong year.
Maybe on a similar vein if we think about the development environment you guys have had a few successes.
But I guess the question is are there less developments happening and you're still getting your share of the pie or somebody else gaining market share on the development side and then you end up paying for it.
You can take out capital well I think that.
I would say that we are seeing opportunities to continue to see opportunities certainly the FDA laboratory space, where we've won all three of the we hope 10 buildings that will be announced over the next decade, but you know we were here talking to you when the first couple of years and there weren't any development opportunities. So it's unique in that it really depends on the federal government.
To come out with an RFP, which many times are literally decades.
Under consideration, having said that I think that we do believe that we're going to see pretty much. The same course that we've seen over the last three years with hopefully one development a year.
And to your point we.
We have successfully taken over a couple of other developments that other people.
We're maybe a little over their skis and and we did some wonderful accretive transactions there and delivered from amazing properties. So we're looking at every opportunity out there I can tell you, Mike Mark and art.
Our flying around the country and looking at things as we speak so I'm confident we will continue to be able to to deliver for development in the future.
Thanks, Bob.
Yeah.
Charles one one observation right as were seeing all these stimulus packages come forward and ultimately an infrastructure Bill we don't want to get ahead of ourselves, but we are moving into an environment over these next 234 years.
The government will be building and growing getting larger and we certainly stand to be a beneficiary of that trend.
Yeah.
Yeah.
Thank you. Our next question is coming from the line of Peter Abramowitz with Jefferies. Please proceed with your question.
Yes. Thank you good morning.
So you are your talks about the opportunity.
For for VA assets from the acquisition market. One thing you had talked about in the past a little bit at the beginning of the pandemic was.
Some multi type asset owners that you compete with potentially facing liquidity issues financial distress.
How is that kind of cycling on the acquisition market.
Shaping up is that something that's still materializing or.
I think I think of it yes.
And good morning.
Think that is absolutely is an opportunity for us.
And we're spending certainly all the time with plenty of time meeting with our friends from the brokerage community our contact center on a less making sure that people that that have government properties and other more challenged properties now that we're a very very attractive way to exit.
A very quick.
Quick and hopefully pleasant manner.
Okay, and how does that how does that materialize in a way that was any more or less than what you anticipated.
I think I was on track I won't go on in particular building because I don't want to talk.
Talking about comparison solid total under the <unk>.
Scenarios, but no I think it's been pretty much in line.
Got it got it.
And then just going under the Hood.
For 'twenty, one up on forward guidance.
I know you disclosed the investment activity.
Thing from either like a G&A perspective or.
On the expense side to make a note of.
Even though that's notable or that's changed since you first gave guidance last quarter.
Okay.
Sure.
Hey, Peter No I would say, there's been no quarter over quarter change in expectation, thus no quarter over quarter change in guidance I think you can.
Obviously, we haven't been on planes visiting assets. This year, so we're going to need to consider that in our G&A. As you think about this share versus next year, but we have.
Found operating leverage on that line as we've continued to grow NOI over time and you can expect for the same in 'twenty on slightly one.
Got it that's helpful. Okay. That's it for me thank you.
Thank you. Our next question is coming from the line of Michael Lewis with Truest. Please proceed with your questions.
Great. Thank you.
I have two questions on <unk>.
The disposition I realize it was small.
I'll just ask the first one first.
Could you just talk a little about what happens what happened there it looked like.
That's the tenant tenant redo and then you sold ex How're you put on.
The loss on the income statement could you just talk about.
What happened there and then maybe a little bit about the pricing or the return of the IRR on that investment if you could.
Yeah, So maybe in reverse order Mike.
And we're really pleased with the value that we got on that asset that was an asset that was contributed as part of the portfolio at IPO. It was allocated a value at that time.
It's.
We're happy to be moving on and focused on maintaining this pristine portfolio and growing.
The rest of the portfolio.
Okay.
The reason I asked the question.
When you look for.
Repaired remarks, when he talked about as you mentioned this on your priorities.
Chosen government priorities is highly wanted be on the Cigna.
Significant risks for investments to have.
Is there anything else related to that in other words, the government trends on your priority that may impact other properties in your portfolio or anything you see on that topic.
Well I mean, I think if you look at job government priorities I'd say much bigger pictures are EPA, which we have some amazing assets, there and theyre going to be the recipient of that I think have a heck of a lot of larger house going forward over the next bunch of years and we're very excited about that.
And I will say as an owner of a of a car that has not had a nick on it since 2010 getting one Chinese scratch behind the left tires. Finally, relieves me to be able to drive that far faster and not worry about it started on for many years and.
Yes.
Always nice when one of your 10 smallest it's one of your 10 smallest assets and one of your oldest and and we moved on and we've got a good price and so off we go on and keeping this pristine.
Chugging down the highway.
Okay and I understand there are small I just wanted to make sure there wasn't anything from you know really.
To that time.
Could be bigger picture.
And then just lastly from me.
This is a bigger picture question.
Interest rates are still obviously very low.
Treasury has started to pick up you know I was just wondering Daryl described this model of 2% to 3% gross you've got a four 5%.
If we see interest rates continue to creep up does that change depending on your playbook that all the way to look at.
The growth rate for.
The view of acquisitions versus development.
Or do you think rates would impact that that volume required development you know could you maybe describe for higher.
But any thoughts on that.
The interest rate environment for us.
Playbook at all.
Yeah, I mean, there's a couple of things.
Yes.
If interest rates are changing materially over the interim period cap rates are also going to go up and so these continue to be sort of the most pristine assets debt.
Have again consistent cash flow over long periods of time I think we also benefit from just on the margin I mean close to 30% of our leases will be renewing in the next next for years.
Compared to a.
On a portfolio that has many many 20 year leases and we will see many more so.
So I think keeping up with inflation.
Portfolio is positioned in a nice way for for that to happen.
And so we find ourselves in a place where also given our cost of capital and given what we're seeing in the market and as we sort of.
Sure broadcasting a level a little elevated optimism as we look forward.
The opportunity for us to accrete and grow the portfolio faster.
As well within our reach.
We are emerging from COVID-19, with I think a very good relationship with the government a favorable environment with the government.
Capital environment that works for us and our competitive position relative to other buyers that is very strong.
Okay, great. Thank you.
Thank you. Our next question is coming from the line of Bill Crow with Raymond James. Please proceed with your questions.
Thanks, Good morning, let me just.
Maybe more directly asked you're asking a question that was just posed.
You have no known or expected move outs over the next couple of years.
Right way to think about it.
Yes.
Yeah absolutely.
Say it again this one building that we sold.
It was allocated a value a tiny building allocated a value during it.
Formation transaction and there is a bunch of tensions push and pulls with regard to bringing parties together, taking a company public.
We may have over allocated a bit because today you look at that building and this was fair value and so there is really even though there is some.
Running through the books in a certain way there is nothing about that that feels surprising different or unanticipated from from our perspective.
Got it Okay and then.
Apologize if I missed this earlier, but from the acquisition for us.
Any perspective portfolio deals out there that are.
We should.
Consider well I mean, there are out there, but I'm certainly not going on acid on this phone call.
Yes.
There are plenty of opportunities out there and you can rest assure that we're mining.
Mining through as many as we can.
And are confident that we're going to end up with some wonderful opportunities over the next two years on.
Obviously, mostly what we report on as the other ones and twos Bill that we've been working on which provides the most pristine assets and we're also very excited about that so.
As you know from early days on I think this is a conversation you and I have even before we were public.
We very much want to broadcast stability consistency our guidance for this year is just right.
As bill was alluding to our acquisitions can be lumpy. So there is no way, we want our deal team to feel pressure to buy a building that we wouldn't buy because we need to make a consensus estimate that's out there.
That all said as you step back I mean.
Covid is tough to get deals done and so as and I'm really proud of the team and how that they were able to execute and exceed those expectations. As you know at the beginning of 2020, we throttled those expectations back a bit on.
Understanding the environment, but it's not hard to imagine that given the context of the Biden administration, given the context of some potential.
Sort of pent up demand as vaccines get out there and as the world opens up.
It's going to be easier for us and so we're not going to be pigs about it but we're going to continue to build a pristine portfolio, we're going to do it in a nice way, but it's going to we're going to feel a little more wind at our back then that we have in the past.
Understood we'll keep the.
For might be behind for us. Thank you very much from a modeling perspective. Thanks.
Thank you.
Thank you as a reminder, if you would like to ask a question. Please press star one on your telephone keypad.
Our next questions come from the line of Michael Carroll with RBC. Please proceed with your questions.
Yes, Thanks, I wanted to talk a little bit on the acquisition activity and I think bill on your comments or maybe in one of the questions. You've kind of said that there is some single asset acquisitions youre looking at in smaller portfolio deals.
And did I hear that correctly and if so can you talk a little bit about those smaller portfolio deals that just two to three assets portfolio Youre, absolutely right, which you heard of but there are only 550 buildings out there. So even though we are all friends on this phone call I don't think I'm going to tell you what I'm in negotiations to do.
And who we're going to do them with but I have seen more opportunities to do those negotiations, but I've seen in a long time.
Okay. So I guess those portfolio transactions that are smaller portfolio or larger portfolio that you don't want to talk about I guess just kind of put this is it.
Yes.
Well, we're kind of biased because I'm sure we can drive that price to unbelievable levels, but let's just say that we're confident that we're going to do or a number of this year and just like last year, we're going to try to exceed it and it's going to be with great buildings on it is going to be any mix of.
Bullseye portfolio.
<unk> critical facilities.
Okay, and then on the development side.
I know that you've won on a number of.
The FDA labs, I mean, what's the pace of those FDA labs can each day are you expect another one that will come out to.
The RFP here shortly that you could potentially win or a what's what are their thinking behind us.
We're comfortable that FDA Atlanta will be the next FDA lab delivered.
And they will they can only handle sort of one or two of these at a time and so we expect there to be a pipeline subsequent to that but.
Where we're going on on Atlanta Crystal pharma.
I mean as taxpayers you got to feel great about the government and how they are how they are rolling this out they have a terrific team we've enjoyed working with them on each of these projects.
When you look ahead to 2030.
2035, the FDA will have revamped all of these labs that will happen.
So is that going to happen. This year next year I don't know, but we are very well positioned for an opportunity that could exceed everybody's expectations for our development opportunity over the next 10 years and I think it's only natural.
When you see that Covid was there it was difficult for the government to get around to a lot of these facilities Luckily not Luckily I mean, Mike and his team has done a terrific job were already in place in Atlanta. So we were able to to do the planning we already had the building before this happened so it didn't particularly slow us down, but having said that now that hopefully these folks will be good.
<unk> vaccines and travel will resume for the government didn't slow our travel down to say this but it did for them.
We're going to get more things in order and hopefully we.
We will see some more activity there.
Okay, and then I know the FDA has been pretty active with the with these new builds is there any other agency that youre looking at that has also been active the VA. Similarly active out there right now is very active.
And we think that FEMA has is going to be active and there are a few facilities for the FBI.
It needs to be replaced and so from that standpoint, we've probably seen more and more agencies out there looking to do some building that we have for quite some time.
Okay, great. Thank you. Thank you.
Thank you there are no further questions at this time I would like to turn the call back over to Darryl credit for any closing comments.
Well. Thank you very much for joining us for this fourth quarter conference call. We very much look forward to delivering strong results from 2021 and we appreciate.
Your interest focus and we really look forward to two year debt is ahead.
Thank you for your participation. This does conclude today's teleconference. You may disconnect your lines at this time.
Great day.