Q1 2026 Easterly Government Properties Inc Earnings Call

April 27, 2026

Operator: Greetings. Welcome to the Easterly Government Properties Q1 2026 Earnings Conference Call. At this time all participants are in a listen-only mode. After the speaker's presentation, there will be a question-and-answer session between the company's research analysts and Easterly's management team. To ask a question during the session, 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 Barterwill, Director of Investor Relations. Please go ahead.

Speaker #1: To ask a question during the session, analysts will need to press star 1-1 on their telephone. They will then hear an automated message advising their hand is raised.

Speaker #1: Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Cole Barterwell, Director of Investor Relations.

Speaker #1: Please go ahead.

Speaker #2: 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.

Cole Barterwill: 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 its other SEC filings. The company assumes no obligation to update publicly any forward-looking statements.

Cole Bardawill: 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 its other SEC filings. The company assumes no obligation to update publicly any forward-looking statements.

Speaker #2: 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.

Speaker #2: 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 its other SEC filings.

Speaker #2: 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.

Cole Barterwill: Additionally, on this conference call, the company may refer to certain non-GAAP financial measures such as funds from operations, Core FFO, 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 Daryl Craig, President and CEO of Easterly Government Properties.

Cole Bardawill: Additionally, on this conference call, the company may refer to certain non-GAAP financial measures such as funds from operations, Core FFO, 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 Daryl Craig, President and CEO of Easterly Government Properties.

Speaker #2: 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.

Speaker #2: I would now like to turn the conference call over to Darrell Crate, President and CEO of Easterly Government Properties.

Speaker #3: Thank you, Cole. Good morning, everyone. We continue to operate in a market defined by volatility. Whether it's interest rates, geopolitical uncertainty, or broader capital market disruption, in these environments investors tend to focus on businesses with durable cash flows, strong tenant credit, and disciplined capital allocation.

Daryl Craig: Thank you, Cole. Good morning, everyone. We continue to operate in a market defined by volatility, whether it's interest rates, geopolitical uncertainty, or broader capital market disruption. In these environments, investors tend to focus on businesses with durable cash flows, strong tenant credit, and disciplined capital allocation. We believe Easterly continues to stand out in each of these areas. Our portfolio supports essential government functions that continue regardless of economic cycles or external events. These are facilities tied to critical federal missions, high credit state and municipal agencies, and select defense-related tenants. The durability of those missions and the strength of those credit relationships continues to provide a stable foundation for our business. Importantly, we believe our portfolio is often misclassified alongside traditional office real estate. That comparison misses the specialized nature of what we own.

Darrell Crate: Thank you, Cole. Good morning, everyone. We continue to operate in a market defined by volatility, whether it's interest rates, geopolitical uncertainty, or broader capital market disruption. In these environments, investors tend to focus on businesses with durable cash flows, strong tenant credit, and disciplined capital allocation. We believe Easterly continues to stand out in each of these areas. Our portfolio supports essential government functions that continue regardless of economic cycles or external events. These are facilities tied to critical federal missions, high credit state and municipal agencies, and select defense-related tenants. The durability of those missions and the strength of those credit relationships continues to provide a stable foundation for our business. Importantly, we believe our portfolio is often misclassified alongside traditional office real estate. That comparison misses the specialized nature of what we own.

Speaker #3: We believe Easterly continues to stand out in each of these areas. Our portfolio supports essential government functions that continue regardless of economic cycles or external events.

Speaker #3: These are facilities tied to critical federal missions, high-credit state and municipal agencies, and select defense-related tenants. The durability of those missions and the strength of those credit relationships continues to provide a stable foundation for our business.

Speaker #3: Importantly, we believe our portfolio is often misclassified alongside traditional office real estate. That comparison misses the specialized nature of what we own. From our FBI offices in places like El Paso, New Orleans, and Pittsburgh, these facilities include secure, classified environments, SCIFs, and other controlled spaces where sensitive law enforcement and intelligence work is conducted.

Daryl Craig: From our FBI offices in places like El Paso, New Orleans, and Pittsburgh, these facilities include secure classified environments, SCIFs, and other controlled spaces where sensitive law enforcement and intelligence work is conducted. These are highly tailored facilities with support agents that support agency-specific operations and are difficult to replicate. They serve essential functions, benefit from long-duration leases, and are backed by some of the strongest credit tenants in the world. Against that backdrop, we remain focused on a straightforward strategy, growing earnings steadily, allocating capital thoughtfully, and continuing to improve overall portfolio quality over time. Over the past several years, we've taken deliberate steps to strengthen the company, including leadership transitions, resetting the dividend, and maintaining additional capital internally.

Darrell Crate: From our FBI offices in places like El Paso, New Orleans, and Pittsburgh, these facilities include secure classified environments, SCIFs, and other controlled spaces where sensitive law enforcement and intelligence work is conducted. These are highly tailored facilities with support agents that support agency-specific operations and are difficult to replicate. They serve essential functions, benefit from long-duration leases, and are backed by some of the strongest credit tenants in the world. Against that backdrop, we remain focused on a straightforward strategy, growing earnings steadily, allocating capital thoughtfully, and continuing to improve overall portfolio quality over time. Over the past several years, we've taken deliberate steps to strengthen the company, including leadership transitions, resetting the dividend, and maintaining additional capital internally.

Speaker #3: These are highly tailored facilities with support agents that support agency-specific operations and are difficult to replicate. They serve essential functions, benefit from long-duration leases, and are backed by some of the strongest credit tenants in the world.

Speaker #3: Against that backdrop, we remain focused on a straightforward strategy: growing earnings steadily, allocating capital thoughtfully, and continuing to improve overall portfolio quality over time.

Speaker #3: Over the past several years, we've taken deliberate steps to strengthen the company, including leadership transitions, resetting the dividend, and maintaining additional capital internally. These decisions are not always easy, but they position us to enter 2026 from a position of strength.

Daryl Craig: These decisions are not always easy, but they position us to enter 2026 from a position of strength, supporting a robust and sustainable dividend while continuing to deliver consistent earnings growth that outperforms our peers. Turning to the quarter, our portfolio continued to perform at a high level. Occupancy continues to outpace our REIT peers at 97%, and weighted average lease terms stood at approximately 9.4 years. These metrics reflect both the quality of our assets and the mission-critical nature of the work taking place inside our buildings. During the quarter, we also completed our first mezzanine investment tied to the development of a new VA outpatient clinic. This transaction reflects how we are thinking about capital allocation in today's environment. While traditional acquisitions remain central to our long-term growth strategy, we are also identifying adjacent opportunities that can generate attractive current returns while preserving future optionality.

Darrell Crate: These decisions are not always easy, but they position us to enter 2026 from a position of strength, supporting a robust and sustainable dividend while continuing to deliver consistent earnings growth that outperforms our peers. Turning to the quarter, our portfolio continued to perform at a high level. Occupancy continues to outpace our REIT peers at 97%, and weighted average lease terms stood at approximately 9.4 years. These metrics reflect both the quality of our assets and the mission-critical nature of the work taking place inside our buildings. During the quarter, we also completed our first mezzanine investment tied to the development of a new VA outpatient clinic. This transaction reflects how we are thinking about capital allocation in today's environment. While traditional acquisitions remain central to our long-term growth strategy, we are also identifying adjacent opportunities that can generate attractive current returns while preserving future optionality.

Speaker #3: Supporting a robust and sustainable dividend while continuing to deliver consistent earnings growth that outperforms our peers. Turning to the quarter, our portfolio continued to perform at a high level.

Speaker #3: Occupancy continues to outpace our REIT peers at 97%, and weighted average lease terms stood at approximately 9.4 years. These metrics reflect both the quality of our assets and the mission-critical nature of the work taking place inside our buildings.

Speaker #3: During the quarter, we also completed our first mezzanine investment tied to the development of a new VA outpatient clinic. This transaction reflects how we are thinking about capital allocation in today's environment.

Speaker #3: While traditional acquisitions remain central to our long-term growth strategy, we are also identifying adjacent opportunities that can generate attractive current returns while preserving future optionality.

Speaker #3: This investment is expected to deliver a 12% yield, is backed by a committed federal tenant, and allows us to remain connected to an asset that may ultimately fit in our long-term ownership strategy.

Daryl Craig: This investment is expected to deliver a 12% yield, is backed by a committed federal tenant, and allows us to remain connected to an asset that may ultimately fit in our long-term ownership strategy. VA facilities represent one of our largest portfolio exposures. That's by design. These assets are highly specialized, tend to be very sticky, and are backed by the credit quality of the federal government. We were recently at our VA Jacksonville facility. It was filled with veterans receiving the care and services they need. An important reminder that these aren't traditional office buildings, but essential infrastructure supporting critical mission. We also believe that the administration's increased focus on defense spending represents an additional tailwind for the company, particularly as it relates to external growth opportunities.

Darrell Crate: This investment is expected to deliver a 12% yield, is backed by a committed federal tenant, and allows us to remain connected to an asset that may ultimately fit in our long-term ownership strategy. VA facilities represent one of our largest portfolio exposures. That's by design. These assets are highly specialized, tend to be very sticky, and are backed by the credit quality of the federal government. We were recently at our VA Jacksonville facility. It was filled with veterans receiving the care and services they need. An important reminder that these aren't traditional office buildings, but essential infrastructure supporting critical mission. We also believe that the administration's increased focus on defense spending represents an additional tailwind for the company, particularly as it relates to external growth opportunities.

Speaker #3: VA facilities represent one of our largest portfolio exposures, and that's by design. These assets are highly specialized, tend to be very sticky, and are backed by the credit quality of the federal government.

Speaker #3: We were recently at our VA Jacksonville facility. And it was filled with veterans receiving the care and services they need. An important reminder that these aren't traditional office buildings, but essential infrastructure supporting critical mission.

Speaker #3: We also believe that the administration's increased focus on defense spending represents an additional tailwind for the company particularly as it relates to external growth opportunities.

Speaker #3: As we look to the year ahead, we are encouraged by the strength of our first quarter performance and our ability to raise the low end of guidance.

Daryl Craig: As we look to the year ahead, we are encouraged by the strength of our Q1 performance and our ability to raise the low end of guidance. While broader market volatility remains, our priorities remain unchanged: disciplined capital allocation, operational execution, and consistent earnings growth. We believe our portfolio offers investors a compelling combination of income stability, long-term growth, and exceptional tenant credit quality. With a leased portfolio that generates a double A plus revenue stream, we look forward to working with the credit agencies on achieving an investment-grade rating in 2027. To wrap up, we're pleased with how the year started. We're growing earnings, maintaining strong occupancy, allocating capital thoughtfully, and continuing to improve portfolio quality. We believe that disciplined execution will continue creating long-term value for shareholders.

Darrell Crate: As we look to the year ahead, we are encouraged by the strength of our Q1 performance and our ability to raise the low end of guidance. While broader market volatility remains, our priorities remain unchanged: disciplined capital allocation, operational execution, and consistent earnings growth. We believe our portfolio offers investors a compelling combination of income stability, long-term growth, and exceptional tenant credit quality. With a leased portfolio that generates a double A plus revenue stream, we look forward to working with the credit agencies on achieving an investment-grade rating in 2027. To wrap up, we're pleased with how the year started. We're growing earnings, maintaining strong occupancy, allocating capital thoughtfully, and continuing to improve portfolio quality. We believe that disciplined execution will continue creating long-term value for shareholders.

Speaker #3: While broader market volatility remains, our priorities remain unchanged: disciplined capital allocation, operational execution, and consistent earnings growth. We believe our portfolio offers investors a compelling combination of income stability, long-term growth, and exceptional tenant credit quality.

Speaker #3: With a leased portfolio that generates a double A-plus revenue stream, we look forward to working with the credit agencies on achieving an investment-grade rating in 2027.

Speaker #3: To wrap up, we're pleased with how the year started. We're growing earnings, maintaining strong occupancy, allocating capital thoughtfully, and continuing to improve portfolio quality.

Speaker #3: We believe that disciplined execution will continue creating long-term value for shareholders, and I want to thank our team for their continued focus and execution, as well as our tenants and shareholders for their ongoing trust and partnership.

Daryl Craig: I want to thank our team for their continued focus and execution, as well as our tenants and shareholders for their ongoing trust and partnership. With that, I'll turn the call over to Alison.

Darrell Crate: I want to thank our team for their continued focus and execution, as well as our tenants and shareholders for their ongoing trust and partnership. With that, I'll turn the call over to Alison.

Speaker #3: With that, I'll turn the call over to Allison.

Speaker #2: Thanks, Darrell, and good morning, everyone. I'm pleased to report the financial results for the first quarter of 2026 on this sunny Monday morning. The underlying growth in the business is clear.

Allison Marino: Thanks, Daryl. Good morning, everyone. I'm pleased to report the financial results for Q1 of 2026 on this sunny Monday morning. The underlying growth in the business is clear. Total revenue increased to $91.5 million, up from $78.7 million in Q1 of 2025, a 16% year-over-year increase. This is driven primarily by acquisitions completed over the last 12 months, contractual rent growth, and continued lease stability across the portfolio. EBITDA also grew meaningfully, increasing from $57.3 million from $51 million last year, representing approximately 12% growth, reflecting the expanding earnings power of the platform. Most importantly, that growth continued to translate into higher earnings for shareholders on a per share basis, even as we raised capital to support portfolio expansion.

Speaker #2: Total revenue increased to $91.5 million, up from $78.7 million in the first quarter of 2025—a 16% year-over-year increase. This was driven primarily by acquisitions completed over the last 12 months, contractual rent growth, and continued lease stability across the portfolio.

Speaker #2: EBITDA also grew meaningfully, increasing to $57.3 million from $51 million last year, representing approximately 12% growth and reflecting the expanding earnings power of the platform.

Speaker #2: Most importantly, that growth continued to translate into higher earnings for shareholders on a per-share basis, even as we raised capital to support portfolio expansion.

Speaker #2: On a fully diluted basis, net income per share was $0.03. FFO per share increased to $0.76, up from $0.71, representing approximately 7% growth, while core FFO per share increased to $0.77 from $0.73, or roughly 5.5% growth year over year.

Allison Marino: On a fully diluted basis, net income per share was $0.03. FFO per share increased to $0.76, up from $0.71, representing approximately 7% growth, while Core FFO per share increased to $0.77 from $0.73, or roughly 5.5% growth year over year. Our cash available for distribution was approximately $32.2 million. In terms of our active development projects, we are on track to meet previously communicated timelines. Our Fort Myers, Florida lab project is expected to complete and commence its lease in Q4 2026. That will be followed by the Flagstaff Courthouse in Arizona, which is scheduled to deliver in Q1 2027. Finally, the Medford Courthouse in Oregon is anticipated to complete during H2 2027.

Speaker #2: Our cash available for distribution was approximately $32.2 million. In terms of our active development projects, we are on track to meet previously communicated timelines.

Speaker #2: Our Fort Myers, Florida lab project is expected to complete and commence its lease in the fourth quarter of 2026. That will be followed by the Flagstaff Courthouse in Arizona, which is scheduled to deliver in the first quarter of 2027.

Speaker #2: Finally, the Medford Courthouse in Oregon is anticipated to complete during the second half of 2027. The delivery of these development projects are natural delivering points towards our medium-term cash leverage goals as the NOI comes online and any agreed-upon lump sums are received.

Allison Marino: The delivery of these development projects are natural delevering points towards our medium-term cash leverage goals as the NOI comes online and any agreed-upon lump sums are received. Turning to leverage, our adjusted net debt to annualized quarterly pro forma EBITDA was 7.3x, edging higher during the Q1, due primarily to the timing of equity issuance relating to our Commonwealth of Virginia acquisition. Given the share price volatility the broader markets experienced in the Q1, we elected to defer issuing the majority of that equity, and we expect to complete the issuance by the end of the year. As Daryl mentioned, during the Q1, we completed our first mezzanine loan investment, providing $7 million of financing for the development of a new 120,000 sq ft VA outpatient clinic in Kennewick, Washington.

Speaker #2: Turning to leverage, our adjusted net debt to annualized quarterly pro forma EBITDA was 7.3 times, edging higher during the quarter due primarily to the timing of equity issuance relating to our Commonwealth of Virginia acquisition.

Speaker #2: Given the share price volatility the broader market's experienced in the first quarter, we elected to defer issuing the majority of that equity. And we expect to complete the issuance by the end of the year.

Speaker #2: As Darrell mentioned, during the quarter we completed our first mezzanine loan investment, providing $7 million of financing for the development of a new 120,000-square-foot VA outpatient clinic in Kennewick, Washington.

Speaker #2: The loan carries an anticipated 12% yield and supports a 20-year firm-term lease commitment from the Department of Veterans Affairs, with an expected project completion date of October 2028.

Allison Marino: The loan carries an anticipated 12% yield and supports a 20-year firm term lease commitment from the Department of Veterans Affairs with an expected project completion date of October 2028. The transaction is backed by an experienced VA and GSA developer as sponsor, who our team has known for decades and Easterly has transacted with multiple times. This allows us the opportunity to acquire the property upon completion as well. The investment enables us to generate attractive current returns while remaining closely aligned with assets that fit our long-term portfolio strategy.

Speaker #2: The transaction is backed by an experienced VA and GSA developer as sponsor, who our team has known for decades and Easterly has transacted with multiple times.

Speaker #2: This allows us the opportunity to acquire the property upon completion as well. And the investment enables us to generate attractive current returns while remaining closely aligned with assets that fit our long-term portfolio strategy.

Speaker #2: With this successful closing of the mezzanine loan during the quarter, we are raising the low end of our full-year guidance by one penny, from $3.05 to $3.06, resulting in a revised full-year range of $3.06 to $3.12.

Allison Marino: With the successful closing of the mezzanine loan during the quarter, we are raising the low end of our full year guidance by 1 penny from $3.05 to $3.06, resulting in a revised full year range of $3.06 to $3.12. While performance year-to-date is trending modestly ahead of our initial expectations, we continue to take a disciplined and cautious approach as we evaluate the remainder of the year, particularly given the ongoing volatility in the interest rate and broader equity market environment. At the midpoint, our guidance assumes that we will have $50 to $100 million of gross development related investment during the year and $50 million in wholly owned acquisitions.

Speaker #2: While performance year-to-date is trending modestly ahead of our initial expectations, we continue to take a disciplined and cautious approach as we evaluate the remainder of the year, particularly given the ongoing volatility in the interest rate and broader equity market environment.

Speaker #2: At the midpoint, our guidance assumes that we will have $50 million to $100 million of gross development-related investment during the year and $50 million in wholly owned acquisitions.

Speaker #2: We continue to maintain a $1.5 billion acquisition and development pipeline, and we are beginning to make meaningful progress on potential transactions that meet our investment criteria and can be executed at a spread to our cost of capital.

Allison Marino: We continue to maintain a $1.5 billion acquisition and development pipeline. We are beginning to make meaningful progress on potential transactions that meet our investment criteria and can be executed at a spread to our cost of capital, either independently or through a partnership. We're staying disciplined on capital allocation, focused on retaining our tenants and executing across our development pipeline, all in line with the strategic objectives we've communicated. These are the fundamentals behind Easterly's stable and growing cash flows. We believe this will drive shareholder value. 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.

Speaker #2: Either independently or through a partnership, we're staying disciplined on capital allocation, focused on retaining our tenants, and executing across our development pipeline—all in line with the strategic objectives we've communicated.

Speaker #2: These are the fundamentals behind Easterly’s stable and growing cash flows, and we believe this will drive shareholder value. Thank you for your time this morning.

Speaker #2: We appreciate your partnership and look forward to updating you on our progress. With that, I will now turn the call back to Shannon.

Speaker #3: Thank you. As a reminder to the analysts, to ask a question, you will need to press star one-one on your telephone. Please stand by while we compile the Q&A roster.

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

Operator: Thank you. As a reminder to the analysts, to ask a question, you will need to press star one one on your telephone. Please stand by while we compile the Q&A roster.

Speaker #3: Our first question is from Seth Bergay of City. Please proceed with your question.

Operator: Our first question is from Seth Bergey of Citigroup. Please proceed with your question.

Seth Bergey: Hi, um, thanks for taking my question. I guess just starting off with the mezzanine lending, uh, piece. You know, is the, is the seven million kind of a one-off transaction or is it something you would look, um, to kind of do more of? And, and how should we think about kind of the sizing of that, if that's something that you would kind of, um, you know, think about doing more of in the future?

Speaker #4: Hi, thanks for taking my question. I guess just starting off with the mezzanine lending—is the $7 million kind of a one-off transaction, or is it something you would look to kind of do more of?

Speaker #4: And how should we think about kind of the sizing of that, if that's something that you would kind of think about doing more of in the future?

Speaker #5: Yeah. I mean, look, it's a terrific way for us to get involved early in a project. And I think we could see ourselves allocating about $30 million to this pipeline, the VA pipeline, over the next four, five, six years.

Daryl Craig: Yeah. I mean, look, it's a terrific way for us to get involved early in a project. I think we could see ourselves allocating about $30 million to this pipeline. The VA pipeline over the next 4, 5, 6 years, is quite significant. There's a set of terrific, well-respected developers who really have a knack for building these well. As you can see, you know, at $7 million, roughly $30 million allocated to this effort, would get us involved in 3, 4, you know, projects. Which again, you know, as those buildings are ready to go online in, you know, 1 to 2 years, I think we're very well positioned for them to become part of the broader portfolio.

Darrell Crate: Yeah. I mean, look, it's a terrific way for us to get involved early in a project. I think we could see ourselves allocating about $30 million to this pipeline. The VA pipeline over the next 4, 5, 6 years, is quite significant. There's a set of terrific, well-respected developers who really have a knack for building these well. As you can see, you know, at $7 million, roughly $30 million allocated to this effort, would get us involved in 3, 4, you know, projects. Which again, you know, as those buildings are ready to go online in, you know, 1 to 2 years, I think we're very well positioned for them to become part of the broader portfolio.

Speaker #5: It's quite significant. There's a set of terrific, well-respected developers who really have a knack for building these well. And as you can see, at $7 million, roughly $30 million allocated to this effort would get us involved in three, four projects.

Speaker #5: And which, again, as those buildings are ready to go online in one to two years, I think we're very well positioned for them to become part of the broader portfolio.

Speaker #4: Thanks. And then it sounds like the size of the pipeline is kind of unchanged at the $1.5 billion. And with the Virginia campus closing, you've kind of hit the acquisition, or most of the acquisition guidance for the year.

Seth Bergey: Thanks. Then it sounds like, you know, the size of the pipeline is kind of unchanged at the $1.5 billion. With the Bridging Campus closing, you've kind of hit the acquisition or most of the acquisition guidance for the year. You know, just how active is that? You know, what kind of catalyst do you think could unlock more of that acquisition activity? Just trying to think about, you know, how conservative that number is.

Speaker #4: Just how active is that? What kind of catalyst do you think could unlock more of that acquisition activity? And just trying to think about how conservative that number is.

Speaker #5: Yeah, I mean, look, I think we're very active in working the pipeline. We're also just super judicious about making sure it's accretive. And so, as we look at our earnings that we're delivering for shareholders this year, the midpoint of the range is 3% growth.

Daryl Craig: Yeah. I mean, look, I think we're very active in working the pipeline. We're also, you know, just super judicious about making sure it's accretive. You know, as we look at our earnings that we're delivering for shareholders this year, the midpoint of the range is 3% growth, again, which I think is very favorable, you know, relative to, you know, the REIT sector, especially given our sort of double A plus revenue stream. I think, you know, things will pop out of that $1.5 billion. We are maintaining a very wide funnel on opportunities that are all high quality.

Darrell Crate: Yeah. I mean, look, I think we're very active in working the pipeline. We're also, you know, just super judicious about making sure it's accretive. You know, as we look at our earnings that we're delivering for shareholders this year, the midpoint of the range is 3% growth, again, which I think is very favorable, you know, relative to, you know, the REIT sector, especially given our sort of double A plus revenue stream. I think, you know, things will pop out of that $1.5 billion. We are maintaining a very wide funnel on opportunities that are all high quality.

Speaker #5: Again, which I think is very favorable relative to the REIT sector, especially given our sort of AA-plus revenue stream. And I think things will pop out of that $1.5 billion.

Speaker #5: We're maintaining a very wide funnel on opportunities that are all high quality. And the intent for that wide funnel is for it to then narrow down to some opportunities that, given a little bit of our cost of capital challenge with regard to stock price—but as we improve on cost of capital and debt, and we continue to find opportunities, we can do things that are really attractive, accretive not only to core FFO per share, but also accretive to the portfolio in general.

Daryl Craig: The intent for that wide funnel is for it to then, you know, narrow down to some opportunities that given, you know, a little bit of our cost to capital challenge, with regard to stock price. As we improve on cost to capital and debt, and we continue to find opportunities, we can do things that are really attractive, accretive, not only to, you know, Core FFO per share, but also accretive to the portfolio, you know, in general. There's a couple of very large development opportunities outside of the VAs that I'm discussing that are in that pipeline, which would be very attractive. We're, you know, we have made some relationships with folks that, you know, are actually, you know, 5, 6, 7 years old.

Darrell Crate: The intent for that wide funnel is for it to then, you know, narrow down to some opportunities that given, you know, a little bit of our cost to capital challenge, with regard to stock price. As we improve on cost to capital and debt, and we continue to find opportunities, we can do things that are really attractive, accretive, not only to, you know, Core FFO per share, but also accretive to the portfolio, you know, in general. There's a couple of very large development opportunities outside of the VAs that I'm discussing that are in that pipeline, which would be very attractive. We're, you know, we have made some relationships with folks that, you know, are actually, you know, 5, 6, 7 years old.

Speaker #5: So, there's a couple of very large development opportunities outside of the VAs that I'm discussing that are in that pipeline, which would be very attractive.

Speaker #5: And we've made some relationships with folks that are actually five, six, seven years old. And ultimately, I think we'll be able to work some things out with each of them.

Daryl Craig: Ultimately, I think we can, we'll be able to work some things out with each of them. We really, we wanna make sure the promises that we make on this call, we can keep. I think that we're delivering strong growth, but we're very optimistic about what this pipeline can produce over the next 1, 2, 3 years. That is why we're confident in saying that our long-term growth rate for the company is 2% to 3%. If we're, you know, as we work with the rating agencies and can achieve an investment grade rating, that can also lead to, you know, our growth targets growing as we basically get debt refinanced over the next, you know, 3, 4, 5 years.

Darrell Crate: Ultimately, I think we can, we'll be able to work some things out with each of them. We really, we wanna make sure the promises that we make on this call, we can keep. I think that we're delivering strong growth, but we're very optimistic about what this pipeline can produce over the next 1, 2, 3 years. That is why we're confident in saying that our long-term growth rate for the company is 2% to 3%. If we're, you know, as we work with the rating agencies and can achieve an investment grade rating, that can also lead to, you know, our growth targets growing as we basically get debt refinanced over the next, you know, 3, 4, 5 years.

Speaker #5: So, really, we want to make sure the promises that we make on this call, we can keep. I think that we're delivering strong growth, but we're very optimistic about what this pipeline can produce over the next one, two, three years.

Speaker #5: And that is why we're confident in saying that our long-term growth rate for the company is 2% to 3%. And as we work with the rating agencies and can achieve an investment-grade rating, that can also lead to our growth targets growing as we basically get debt refinanced over the next three, four, five years.

Speaker #4: Great. Thank you.

Seth Bergey: Great. Thank you.

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

Speaker #3: Our next question is from John Kim of BMO Capital Markets. Please proceed with your question.

Speaker #4: Thank you. It sounds like you are moving forward with some investments in your acquisition pipeline of $1.5 billion. So, I'm just wondering, why not update guidance in terms of investment activity?

John Kim: Thank you. It sounds like you are moving forward with some investments in your acquisition pipeline of a billion and a half. I'm just wondering why not update guidance in terms of investment activity. Can you just update us on what kind of spread you're looking for in terms of investment versus your cost of capital? Hey, John. Yeah, we've thought a lot about whether or not to update guidance, particularly with respect to the acquisitions pipeline this quarter. As Daryl mentioned, we are being conservative as we continue to evaluate near-term opportunities within that pipeline and would look to update guidance as we are closer to those deals being cooked. That doesn't, I think, reflect at all about what we think we can do.

Speaker #4: And can you just update us on what kind of spread you're looking for in terms of investments versus your cost of capital?

Allison Marino: Hey, John. Yeah, we've thought a lot about whether or not to update guidance, particularly with respect to the acquisitions pipeline this quarter. As Daryl mentioned, we are being conservative as we continue to evaluate near-term opportunities within that pipeline and would look to update guidance as we are closer to those deals being cooked. That doesn't, I think, reflect at all about what we think we can do.

Speaker #6: Hey, John. Yeah. So, we have thought a lot about whether or not to update guidance, particularly with respect to the acquisitions pipeline this quarter.

Speaker #6: And, as Darrell mentioned, we are being conservative as we continue to evaluate near-term opportunities within that pipeline, and would look to update guidance as we are closer to those deals being cooked.

Speaker #6: That doesn't, I think, reflect at all what we think we can do. It's just about being super transparent about how near-term opportunities are.

Allison Marino: It's just about being super transparent about how near-term opportunities are. And then, uh, the second part, uh, you know, I think we target a hundred basis points spread to our cost of capital. Obviously, this mezzanine financing transaction creates like a six hundred basis point spread for a fairly nominal investment. So definitely balancing all of the opportunities. Mez is a, is an example of one of the actionable opportunities in our pipeline today, uh, and one that, as Daryl mentioned, we'll continue to evaluate as we go forward. I would say, just to reiterate then, targets a hundred, um, fifty to a hundred is our defined range.

Speaker #6: And then the second part, I think we target 100 basis points spread to our cost of capital. Obviously, this mezzanine financing transaction creates a 600 basis points spread for a fairly nominal investment.

Speaker #6: So definitely balancing all of the opportunities. Mez is an example of one of the actionable opportunities in our pipeline today. And one that, as Darrell mentioned, will continue to evaluate as we go forward.

Speaker #6: I would say, just to reiterate then, the target is 100; 50 to 100 is our defined range.

Speaker #4: And on the Mez book, getting to $30 million potentially, is that something that could happen this calendar year? Or if you could just talk about how fast you want to get to that $30 million?

John Kim: And on the Mez book getting to thirty million, uh, potentially, is that something that could happen this calendar year? Or could you just talk about h-how fast you want to get to that thirty million?

Daryl Craig: Uh, I'd say over the next eight-

Speaker #4: And also.

Speaker #5: Yeah. Over the next 18 months, John, is when we can get that deployed. I mean, we're really I think we've delivered some terrific growth for this year.

John Kim: And also-

Daryl Craig: Yeah, over the next 18 months, John, is when we can get that deployed. I think we've delivered some real terrific growth for this year, and I think we're really setting ourselves up for a nice 2027. I'd love to be giving guidance for 2027, but Allison and Cole won't let me. We're excited again to continue to grow in a way that we think will be pleasing to shareholders.

Darrell Crate: Yeah, over the next 18 months, John, is when we can get that deployed. I think we've delivered some real terrific growth for this year, and I think we're really setting ourselves up for a nice 2027. I'd love to be giving guidance for 2027, but Allison and Cole won't let me. We're excited again to continue to grow in a way that we think will be pleasing to shareholders.

Speaker #5: And I think we're really setting ourselves up for a nice 2027. I'd love to be giving guidance for 2027, but Allison and Cole won't let me.

Speaker #5: And, but we're excited again to continue to grow in a way that we think will be pleasing to shareholders.

Speaker #4: And are these on projects that you feel comfortable owning? Or do you plan to own some of these assets?

John Kim: Are these on projects that you feel comfortable owning, or do you plan to own some of these assets?

Speaker #5: Oh, yeah. They're great assets. They're great assets. The way we're legging our way into them, I think, is very attractive for shareholders. And these are assets that are seven-cap kind of assets that I think, given how we're entering and how we're in the capital structure, we can buy attractively.

Daryl Craig: Oh, yeah. They're great assets. They're how we're legging our way into them, I think is very attractive for shareholders. These are assets that are, you know, 7 cap kind of assets that I think, given how we're entering and how we're in the capital structure, we can buy attractively.

Darrell Crate: Oh, yeah. They're great assets. They're how we're legging our way into them, I think is very attractive for shareholders. These are assets that are, you know, 7 cap kind of assets that I think, given how we're entering and how we're in the capital structure, we can buy attractively.

Allison Marino: This is an area where we really do have a deep underwriting expertise, not just on the financing product itself, but the underlying collateral. The VA CBOC program is one that continues to expand. There are 20-plus projects that are coming through various stages of procurement, so we do expect additional opportunities in that space, particularly, though there are other GSA projects coming on as well.

Speaker #6: And this is an area where we really do have deep underwriting expertise, not just on the financing product itself, but the underlying collateral.

Speaker #6: And the VA CBOC program is one that continues to expand. There are 20-plus projects that are coming through various stages of procurement. So we do expect additional opportunities in that space, particularly.

Speaker #6: Though there are other GSA projects coming on as well.

Speaker #5: And not to sound too exuberant about it all, but we absolutely understand these assets. And it's worth saying that we're working with folks we've known a long time.

Daryl Craig: And, you know, not to sound too exuberant about it all, but we, um, we absolutely understand these assets. And, you know, uh, it's, it's worth saying that we're working with folks we've known a long time. We're also very good at developing projects, mission-critical projects, and working with the government. I mean, we're seeing at our, uh, Fort Myers, uh, project that's being run by a terrific group at, uh, at-- called SeaGate. Um, but just our understanding and perspective on how to move things along with the government, I think is, uh, it's certainly neutral to accretive, you know, with regard to the project. Um, we're getting to see how these buildings are built as they will because we do work in collaborative partnership with folks that we're Mez lending to. We're not just like a lender in the cap structure.

Darrell Crate: And, you know, not to sound too exuberant about it all, but we, um, we absolutely understand these assets. And, you know, uh, it's, it's worth saying that we're working with folks we've known a long time. We're also very good at developing projects, mission-critical projects, and working with the government. I mean, we're seeing at our, uh, Fort Myers, uh, project that's being run by a terrific group at, uh, at-- called SeaGate. Um, but just our understanding and perspective on how to move things along with the government, I think is, uh, it's certainly neutral to accretive, you know, with regard to the project. Um, we're getting to see how these buildings are built as they will because we do work in collaborative partnership with folks that we're Mez lending to. We're not just like a lender in the cap structure.

Speaker #5: We're also very good at developing projects, mission-critical projects, and working with the government. I mean, we're seeing it in our Fort Myers project. That's being run by a terrific group called Seagate.

Speaker #5: But just our understanding and perspective on how to move things along with the government, I think, is it’s certainly neutral to accretive. With regard to the project, we’re getting to see how these buildings are built as they will because we do work in collaborative partnership with folks that we’re Mez lending to.

Speaker #5: We're not just like a lender in the cap structure, and we can also make suggestions along the way that can either save costs or position the building for more attractive operating costs for the next 20 years.

Daryl Craig: We can also make suggestions along the way, that can either save costs or position the building for more attractive operating costs, you know, for the next 20 years. We're a terrific MEZZ partner. Given where the company is today in cost of capital, it's an excellent way for us to get involved in these assets. We're really excited for, you know, for the growth that that means for shareholders over the next handful of years.

Darrell Crate: We can also make suggestions along the way, that can either save costs or position the building for more attractive operating costs, you know, for the next 20 years. We're a terrific MEZZ partner. Given where the company is today in cost of capital, it's an excellent way for us to get involved in these assets. We're really excited for, you know, for the growth that that means for shareholders over the next handful of years.

Speaker #5: And so we're a terrific Mez partner, given where the company is today in cost of capital. It's an excellent way for us to get involved in these assets.

Speaker #5: And we're really excited for the growth that that means for shareholders over the next handful of years.

Speaker #4: Thank you.

John Kim: Thank you.

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

Speaker #3: Our next question is from Meryl Ross of Compass Point Research and Trading. Please proceed with your question.

Speaker #7: I'm sorry. Was that me?

Merrill Ross: I'm sorry. Was that me?

Speaker #3: Yes.

Operator: Yes.

Allison Marino: Yes.

Operator: Hi, Merrill.

Darrell Crate: Hi, Merrill.

Speaker #7: Hi, Meryl. Okay. The sound dropped out. Okay. So, will any of those VA projects be acquired by the JV, or is that an entity filled?

Merrill Ross: Okay. The sound dropped out. Okay. Will any of those VA projects be acquired by the JV, or is that entity filled? You know, are these going to be wholly owned?

Speaker #7: So are these going to be wholly owned?

Daryl Craig: Great question. The answer is, it could be either. You know, we as we talked about, you know, while we do have this very strong pipeline, we also are being more active today with potential JV partners. We think we have, we obviously have some excellent long-term relationships there. I think these are fantastic assets, and the degree to which we can afford them and deliver growth to our shareholders, they can be wholly owned. That said, if there's an opportunity for us to lend our ability to manage these kinds of facilities in the efficient way that we do, that would allow us to buy them through joint venture, we'd certainly want to capture those economics.

Speaker #5: Great, great, great, great, great question. And the answer is, it could be either. As we talked about, while we do have this very strong pipeline, we also are being more active today with potential JV partners.

Darrell Crate: Great question. The answer is, it could be either. You know, we as we talked about, you know, while we do have this very strong pipeline, we also are being more active today with potential JV partners. We think we have, we obviously have some excellent long-term relationships there. I think these are fantastic assets, and the degree to which we can afford them and deliver growth to our shareholders, they can be wholly owned. That said, if there's an opportunity for us to lend our ability to manage these kinds of facilities in the efficient way that we do, that would allow us to buy them through joint venture, we'd certainly want to capture those economics.

Speaker #5: And we think we have—we obviously have some excellent long-term relationships there. I think these are fantastic assets. And to the degree to which we can afford them and deliver growth to our shareholders, they can be wholly owned.

Speaker #5: With that said, if there's an opportunity for us to lend our ability to manage these kinds of facilities in the efficient way that we do, that would allow us to buy them through joint venture.

Speaker #5: We'd certainly want to capture those economics. But the North Star of all of this is delivering accretion and taking on projects that have that 100-basis-point premium to our cost of capital.

Daryl Craig: The north star of all of this is delivering accretion and taking on projects that have that 100 basis point premium to our cost of capital.

Darrell Crate: The north star of all of this is delivering accretion and taking on projects that have that 100 basis point premium to our cost of capital.

Speaker #5: And again, when we think about cost of capital, we really do think about it on an accounting basis—looking at sort of stock price and FFO as a cost of equity, because that's really what drives FFO accretion.

Merrill Ross: Right

Daryl Craig: when we think about cost of capital, you know, we really do think about it on an accounting basis. You know, looking at sort of, you know, stock price and FFO as a cost of equity because, you know, that's really what drives FFO accretion. But when you think about the IRRs of our projects, you know, with a dividend of 8% and growth of 2% to 3%, you know, we can also start vectoring into, you know, different kinds of costs of equity. But we give very little credit for our future growth in our cost of equity as we allocate it and think about what the spread needs to be to deliver accretion to shareholders. Focusing on that FFO per share growth is the number one metric for this management team.

Darrell Crate: when we think about cost of capital, you know, we really do think about it on an accounting basis. You know, looking at sort of, you know, stock price and FFO as a cost of equity because, you know, that's really what drives FFO accretion. But when you think about the IRRs of our projects, you know, with a dividend of 8% and growth of 2% to 3%, you know, we can also start vectoring into, you know, different kinds of costs of equity. But we give very little credit for our future growth in our cost of equity as we allocate it and think about what the spread needs to be to deliver accretion to shareholders. Focusing on that FFO per share growth is the number one metric for this management team.

Speaker #5: But when you think about the IRRs of our projects, with a dividend of 8% and growth of 2% to 3%, we can also start vectoring into different kinds of cost of equity.

Speaker #5: But we give very little credit for our future growth in our cost of equity as we allocate it and think about what the spread needs to be to deliver accretion to shareholders.

Speaker #5: And focusing on that, FFO per share growth is the number one metric for this management team.

Speaker #7: Great. And as you look at your pipeline just for further distance, is it primarily federal government? Because you said it was outside the VA.

Merrill Ross: Great. As you look at your pipeline just more from, you know, further distance, is it primarily federal government? Because you said it was outside the VA, there was activity. Is there also activity at the state level? Because the Florida acquisition or development you know, is pretty lucrative. It'd be interesting to know the mix.

Speaker #7: There was activity. But is there also activity at the state level? Because the Florida acquisition or development is pretty lucrative. So it would be interesting to know the mix.

Daryl Craig: Yeah.

Darrell Crate: Yeah.

Speaker #5: Yeah, we love Florida. Love Florida. Love Florida. Everybody's moving to Florida. Lots of great people are moving to Florida. But there is some—there are a few criminals in that mix.

Merrill Ross: There.

Daryl Craig: We love Florida. Love Florida. Love Florida. Everybody's moving to Florida. You know, lots of great people are moving to Florida, but you know, there are a few criminals in that mix. They will be building law enforcement facilities in Florida. They're pretty good at law enforcement. The one that we're working on right now that will be actually delivered early, crazy as it sounds, and on budget. They have three or four more of those on the dashboard that they need to get built over the next, you know, 3 to 5 years.

Darrell Crate: We love Florida. Love Florida. Love Florida. Everybody's moving to Florida. You know, lots of great people are moving to Florida, but you know, there are a few criminals in that mix. They will be building law enforcement facilities in Florida. They're pretty good at law enforcement. The one that we're working on right now that will be actually delivered early, crazy as it sounds, and on budget. They have three or four more of those on the dashboard that they need to get built over the next, you know, 3 to 5 years.

Speaker #5: So they will be building law enforcement facilities in Florida. They're pretty good at law enforcement. The one that we're working on right now that will be actually delivered early—crazy as it sounds.

Speaker #5: And on budget. They have three or four more of those on the dashboard that they need to get built over the next three to five years.

Speaker #5: So I think that we're very well positioned to be a good partner in doing that, and can probably do it in a way that's very attractive for the taxpayers of Florida, although they pay very little tax.

Daryl Craig: I think that we're very well positioned to be a good partner in doing that and can probably do it in a way that's very attractive for the taxpayers of Florida, although they pay very little tax. An opportunity for us to do something that's very accretive for shareholders.

Darrell Crate: I think that we're very well positioned to be a good partner in doing that and can probably do it in a way that's very attractive for the taxpayers of Florida, although they pay very little tax. An opportunity for us to do something that's very accretive for shareholders.

Speaker #5: And an opportunity for us to do something that's very accretive for shareholders.

Speaker #6: And then the broader pipeline, you can think about it in roughly thirds. So I would say we see about a third of that $1.5 billion being federal.

Allison Marino: The broader pipeline, you can think about it in roughly thirds. I would say we see about a third of that $1.5 billion being federal, a third being state and local, and a third being government adjacent. If you think between the split of regular way, wholly owned, joint venture, development, MEZZ, financing, it's sort of a mix of all of that, with primarily regular way acquisitions as well as development filling that pipeline up.

Speaker #6: A third being state and local, and a third being government-adjacent. And then if you think between the split of regular way, wholly owned, joint venture, development, Mez, financing, it's sort of a mix of all of that with primarily regular way acquisitions as well as development filling that pipeline up.

Merrill Ross: Okay.

Speaker #5: Yeah, the team has done just a terrific job of building a toolbox of ways to generate accretion for shareholders, since Allison and her team are really just doing a terrific job on the balance sheet.

Daryl Craig: The team has done a just a terrific job of building a toolbox of ways to, you know, generate accretion for shareholders. Allison and her team are really doing a terrific job on the balance sheet. I think we'll have some nice things to talk about over the next, you know, 6 to 9 months.

Darrell Crate: The team has done a just a terrific job of building a toolbox of ways to, you know, generate accretion for shareholders. Allison and her team are really doing a terrific job on the balance sheet. I think we'll have some nice things to talk about over the next, you know, 6 to 9 months.

Speaker #5: And I think we'll have some nice things to talk about over the next six to nine months.

Merrill Ross: I do appreciate the thought of diversity inside the pipeline. Thank you.

Speaker #7: I do appreciate this diversity inside the pipeline. Thank you.

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

Speaker #3: Our next question is from Michael Carroll of RBC Capital Markets. Please proceed with your question.

Speaker #8: Yeah, thanks. Darryl, I wanted to circle back on the Mez investment. I know you said a couple of times that you have the ability to potentially acquire these assets at some day in the future.

Michael Carroll: Yeah, thanks. Gerald, I wanted to circle back on the MEZZ investment. I know you said in a couple times that you have the ability to potentially acquire these assets at some day in the future. I mean, is there a purchase option related to that DEA can exercise to acquire those properties? Or is it just the relationship you get that would allow you to be able to negotiate a price as that deal gets completed?

Speaker #8: I mean, is there a purchase option related to that that DEA can exercise to acquire those properties? Or is it just the relationship you get that would allow you to be able to negotiate a price as that deal gets completed?

Speaker #5: Nope. We have a series of different ways where we have an advantage in the purchase. Allison, do you want to expand on that, or is that—

Daryl Craig: Nope. We have a series of different ways where we have an advantage in the purchase. Allison, do you want to expand on that or say?

Darrell Crate: Nope. We have a series of different ways where we have an advantage in the purchase. Allison, do you want to expand on that or say?

Allison Marino: Yeah. We have both a ROFR and a ROFO on that particular deal. Those are mechanisms we look to build into financing arrangements like this, as a first look.

Speaker #6: Yeah, we have both a ROFER and a ROFO on that particular deal. And those are mechanisms we look to build into financing arrangements like this as a first look.

Speaker #8: Okay. And then, when you talk about deferring funding on some of these deals, does that mean that you have to be more thoughtful about deploying capital here in the near term until you fund the deals that you announced year to date?

Michael Carroll: Okay. Then when you talk about deferring, funding some of these deals, does that mean that you have to be more thoughtful about deploying capital here in the near term until you fund the deals that you announced, year to date?

Daryl Craig: What, what does that mean exactly?

Darrell Crate: What, what does that mean exactly?

Speaker #5: What does that mean exactly?

Speaker #8: I guess in the call, you said that you deferred raising equity to fund the Q1 2026 acquisitions. And correct me if I'm wrong on that.

Michael Carroll: I guess in the call you said that you deferred raising equity to fund the Q1 2026 acquisitions, and correct me if I'm wrong on that. If you're waiting to fund those deals, does it make it more difficult to execute on the pipeline because you haven't funded the Q1 deals yet?

Speaker #8: So if you're waiting to fund those deals, do you have to does it make it more difficult to execute on the pipeline because you haven't funded the the 1Q deals yet?

Speaker #5: Yeah, I mean, look, I think it's actually a pretty marginal comment, and it's more geared toward our debt providers. The idea being that we are going to continue to bring our leverage down over the medium term.

Daryl Craig: Yeah. I mean, look, I think it's a really, it's actually a pretty marginal comment, and it's more toward, you know, geared toward our debt providers. You know, the idea being that we are gonna continue to bring our leverage down over the medium term. We're gonna get something that has a six handle on it. Even though our leverage, you know, modestly ticked up a little bit this quarter, it's not a reflection of a change in our strategy to continue to properly, you know, equitize, you know, these opportunities. As we, you know, look at some of the tools with regard to MEZZ and some of these development transactions, I think we're gonna find ourselves where we can deliver the growth that we're promising.

Darrell Crate: Yeah. I mean, look, I think it's a really, it's actually a pretty marginal comment, and it's more toward, you know, geared toward our debt providers. You know, the idea being that we are gonna continue to bring our leverage down over the medium term. We're gonna get something that has a six handle on it. Even though our leverage, you know, modestly ticked up a little bit this quarter, it's not a reflection of a change in our strategy to continue to properly, you know, equitize, you know, these opportunities. As we, you know, look at some of the tools with regard to MEZZ and some of these development transactions, I think we're gonna find ourselves where we can deliver the growth that we're promising.

Speaker #5: We're going to get something that has a six-handle on it. And even though our leverage modestly ticked up a little bit this quarter, it's not a reflection of a change in our strategy to continue to properly equitize these opportunities.

Speaker #5: And as we look at some of the tools with regard to Mez and some of these development transactions, I think we're going to find ourselves where we can deliver the growth that we're promising.

Speaker #5: We can get our leverage in the right place. We're absolutely, directionally, showing us getting into the right place. And I've said, as obtaining an investment-grade rating can lead to 100 to 150 basis points of additional FFO per share growth over the next five years.

Daryl Craig: We can get our leverage in the right place, or absolutely you know, directionally showing us getting into the right place. You know, I've said as obtaining an investment grade rating can, you know, lead to 100 to 150 basis points of additional, you know, FFO per share growth, you know, over the next, you know, 5 years.

Darrell Crate: We can get our leverage in the right place, or absolutely you know, directionally showing us getting into the right place. You know, I've said as obtaining an investment grade rating can, you know, lead to 100 to 150 basis points of additional, you know, FFO per share growth, you know, over the next, you know, 5 years.

Speaker #8: Okay, great. And then just last one for me. On the available space that you have in your portfolio, like the 3% vacancy, what's the prospect of being able to lease that up?

Michael Carroll: Okay, great. And then just last one from me. Um, on the available space that you have in your portfolio, like the three percent vacancy, um, what's the prospects of being able to lease that up? Is it-- Is some of this space potentially leasable within your portfolio that's currently free?

Speaker #8: Is some of this space potentially leasable within your portfolio that's currently free?

Speaker #5: Yeah, crazy enough—yes. I mean, this is on the list of all the initiatives, and where I'm super proud of the expanded leadership team.

Daryl Craig: Yeah. Crazy enough, yes. I mean, this is on the list of all the initiatives and where I'm super proud of the expanded leadership team. They are working tirelessly. I mean, this FDA lab in Atlanta that we just opened has, I don't know, tens of thousands of square feet that are not leased. The building is fantastic. All the, all the vacant space that we have now is space that we underwrote to be vacant when we, when we purchased these buildings or, you know, or like, you know, we're forecasting obviously NOI. A lot of it's a little extra. We are pursuing that more aggressively than we ever have.

Darrell Crate: Yeah. Crazy enough, yes. I mean, this is on the list of all the initiatives and where I'm super proud of the expanded leadership team. They are working tirelessly. I mean, this FDA lab in Atlanta that we just opened has, I don't know, tens of thousands of square feet that are not leased. The building is fantastic. All the, all the vacant space that we have now is space that we underwrote to be vacant when we, when we purchased these buildings or, you know, or like, you know, we're forecasting obviously NOI. A lot of it's a little extra. We are pursuing that more aggressively than we ever have.

Speaker #5: They are working tirelessly. I mean, this FDA lab in Atlanta that we just opened has tens of thousands of square feet that are not leased.

Speaker #5: The building is fantastic. And all the vacant space that we have now is space that we underwrote to be vacant when we purchased these buildings.

Speaker #5: Or like we're forecasting, obviously, NOI. So a lot of it is a little extra. And we are pursuing that more aggressively than we ever have.

Daryl Craig: That would also be incremental earnings growth, you know, on top of, you know, what we've set in our guidance.

Speaker #5: And that would also be incremental earnings growth on top of what we've set in our guidance. These leases do take—a pursuing them takes a while with the government.

Darrell Crate: That would also be incremental earnings growth, you know, on top of, you know, what we've set in our guidance.

Michael Carroll: Great. Appreciate it.

Daryl Craig: These leases do take. Pursuing them takes a while with the government and, you know, these can be 6 to 9-month kinds of things. As we look to 2027, I, you know, I see that MEZZ debt, the opportunity to get some of this vacant space leased and seeing some things shaking out of our pipeline that are unique for us, being, you know, how we're positioned to the asset and the needs of the seller, can probably come together in a pretty nifty way. We're excited for the opportunity.

Darrell Crate: These leases do take. Pursuing them takes a while with the government and, you know, these can be 6 to 9-month kinds of things. As we look to 2027, I, you know, I see that MEZZ debt, the opportunity to get some of this vacant space leased and seeing some things shaking out of our pipeline that are unique for us, being, you know, how we're positioned to the asset and the needs of the seller, can probably come together in a pretty nifty way. We're excited for the opportunity.

Speaker #5: And these can be six- to nine-month kinds of things. But as we look to 2027, I see that mezz debt and the opportunity to get some of this vacant space leased—and some things shaking out of our pipeline that are unique for us, being how we're positioned to the asset and the needs of the seller—can probably come together in a pretty nifty way.

Speaker #5: So we're excited for the opportunity. We don't know exactly where that's going to all come from. But when you look at the pipeline of opportunities, the tools that we have, and the management teams enthusiasm, effort, and skill, I think we're really excited for 2027.

Daryl Craig: We don't know exactly where that's gonna all come from, but when you look at the, you know, the pipeline of opportunities, the tools that we have, and the management team's enthusiasm, effort, and skill, I think we're really excited for 2027. Well, we are excited for 2027. I think we are.

Darrell Crate: We don't know exactly where that's gonna all come from, but when you look at the, you know, the pipeline of opportunities, the tools that we have, and the management team's enthusiasm, effort, and skill, I think we're really excited for 2027. Well, we are excited for 2027. I think we are.

Speaker #5: But we are excited for 2027. I think we are.

Michael Carroll: Sure.

Speaker #3: Our next question comes from Joe Dixstein of Jefferies. Please proceed with your question.

Operator: Our next question comes from Joe Dickstein of Jefferies. Please proceed with your question.

Speaker #9: Hey, guys. Thanks for taking my question. Darryl, you noted in the opening remarks the intention to achieve an investment-grade credit rating in 2027. You just speak to the deleveraging strategy and other metrics you're focusing on to achieve this?

Joe Dickstein: Hey, guys. Thanks for taking my question. Daryl, you noted in the opening remarks the intention to achieve an investment-grade credit rating in 2027. Can you just speak to the deleveraging strategy and other metrics you're focusing on to achieve this?

Speaker #5: Yeah, there’s a couple. One, if you just squinted at all, you can see that there are other firms that are quite similar to us that have a BBB-plus rating.

Daryl Craig: Yeah, you know, there's a couple. One, if you just squinted at all, you can see that there are other firms that are, you know, quite similar to us, that have a triple B plus rating or triple B, just flat triple B, solid investment grade. Their revenue streams, you know, start from a place of being, you know, single A-minus into triple B plus. If you look at the revenue stream that pours into the top of our business, it's basically double A plus. The idea that the revenue comes in as double A plus and then all the things that happen before it gets to a bondholder is 8 notches lower, that's what it would take for, you know, for us to receive a non-investment grade rating.

Darrell Crate: Yeah, you know, there's a couple. One, if you just squinted at all, you can see that there are other firms that are, you know, quite similar to us, that have a triple B plus rating or triple B, just flat triple B, solid investment grade. Their revenue streams, you know, start from a place of being, you know, single A-minus into triple B plus. If you look at the revenue stream that pours into the top of our business, it's basically double A plus. The idea that the revenue comes in as double A plus and then all the things that happen before it gets to a bondholder is 8 notches lower, that's what it would take for, you know, for us to receive a non-investment grade rating.

Speaker #5: Or BBB, just flat BBB. Solid investment grade. Their revenue streams start from a place of being single A-minus to BBB-plus. If you look at the revenue stream that pours into the top of our business, it's basically double A-plus.

Speaker #5: So the idea that the revenue comes in as double-A-plus, and then all the things that happen before it gets to a bondholder is eight notches lower—that's what it would take for us to receive a non-investment-grade rating.

Speaker #5: I think as we look at the scale of the business, we're in a place that's attractive, probably a little bit on the lower end. And that's a place where—that's probably why we have not pursued an investment-grade rating as aggressively as we could have in the past.

Daryl Craig: I think as we look at scale of the business, we're in a place that's attractive, probably a little bit on the lower end. That's a place where that's probably why we have not pursued a investment grade rating as aggressively as we could have in the past. If you look at leverage, again, we're in the zip code for obtaining an investment grade rating today, especially when we talk about that differential of us being five notches among REITs of, you know, sort of similar credit quality. If we get into the sixes and, you know, as you look at a scattergram of real estate REITs, again, we're very much in a place.

Darrell Crate: I think as we look at scale of the business, we're in a place that's attractive, probably a little bit on the lower end. That's a place where that's probably why we have not pursued a investment grade rating as aggressively as we could have in the past. If you look at leverage, again, we're in the zip code for obtaining an investment grade rating today, especially when we talk about that differential of us being five notches among REITs of, you know, sort of similar credit quality. If we get into the sixes and, you know, as you look at a scattergram of real estate REITs, again, we're very much in a place.

Speaker #5: And if you look at leverage, again, we're in the zip code for obtaining an investment-grade rating today—especially when we talk about that differential of us being five notches among REITs of sort of similar credit quality.

Speaker #5: And, but if we get into the sixes, then as you look at the scattergram of real estate REITs, again, we're very much in a place.

Speaker #5: So leverage is probably the only metric that we look at, and maybe a little bit on scale, where we wouldn't be BBB. But that said, we're working at all of those things.

Daryl Craig: Leverage is probably the only metric that we look at and maybe a little bit on scale, where we wouldn't be a triple B. That said, we're working at all of those things, and we're very committed to behaving like an investment grade company. We understand what that takes, and we think with, you know, WALT, that's almost a decade, you know, plus all that double A plus money coming in, that we're in a nice spot to be able to harvest that opportunity. It could take a little time, we think 2027 is hopefully our year.

Darrell Crate: Leverage is probably the only metric that we look at and maybe a little bit on scale, where we wouldn't be a triple B. That said, we're working at all of those things, and we're very committed to behaving like an investment grade company. We understand what that takes, and we think with, you know, WALT, that's almost a decade, you know, plus all that double A plus money coming in, that we're in a nice spot to be able to harvest that opportunity. It could take a little time, we think 2027 is hopefully our year.

Speaker #5: And we're very committed to behaving like an investment-grade company. We understand what that takes. And we think with WALTs, that's almost a decade, plus all that double-A, plus money coming in, that we're in a nice spot to be able to harvest that opportunity.

Speaker #5: But it could take a little time. But we think 2027 is, hopefully, our year.

Speaker #9: That makes sense. And then just on investments—acquisition targets are still at $50 million. I do understand the cost of capital is a constraint. But maybe just to ask more of a direct question.

Joe Dickstein: That makes sense. Just on investments, your acquisition target's still at $50 million. You know, I do understand cost of capital is a constraint, maybe just to ask more of a direct question, you know, at what share price would you be able to become more active and aggressive on this $1.5 billion pipeline?

Speaker #9: At what share price would you be able to become more active and aggressive on this $1.5 million?

Daryl Craig: Look, I think every little bit of share price will obviously make it easier. You know, from where we are, we don't wanna have a robust call and try and get expectations ahead of where we are. We're really happy with the growth that we're delivering right now. We're gonna be very deliberate about making sure 2027 is right on track. To set ourselves up to disappoint anybody is not what we want to be doing. That said, you know, to just answer your question directly, I mean, at, you know, 2024, 2025, 2026, 2027, those become very, the flywheel really gets going for what we do.

Darrell Crate: Look, I think every little bit of share price will obviously make it easier. You know, from where we are, we don't wanna have a robust call and try and get expectations ahead of where we are. We're really happy with the growth that we're delivering right now. We're gonna be very deliberate about making sure 2027 is right on track. To set ourselves up to disappoint anybody is not what we want to be doing. That said, you know, to just answer your question directly, I mean, at, you know, 2024, 2025, 2026, 2027, those become very, the flywheel really gets going for what we do.

Speaker #5: Look, I think every little bit of share price will obviously make it easier. And from where we are, we don't want to have a robust call and try and get expectations ahead of where we are.

Speaker #5: We're really happy with the growth that we're delivering right now. We're going to be very deliberate about making sure 2027 is right on track.

Speaker #5: And so, to set ourselves up to disappoint anybody is not what we want to be doing. So, that said, to just answer your question directly—I mean, '24, '25, '26, '27—those become very, the flywheel really, really gets going for what we do.

Joe Dickstein: Great. Thank you for taking the time. Appreciate it.

Speaker #9: Great. Thank you for taking the time. Appreciate it.

Daryl Craig: You know what? If we don't get the support from the capital markets and continue to have this 8% dividend, we can still meet these growth targets. I mean, we've built enough tools. We have strong JV partners. We're gonna be able to deliver that value. Of course, with a lower cost of capital, we're excited, the team is excited, and our disposition is to really accelerate the growth of the company. The team is very aligned in achieving those objectives consistently for a bunch of years.

Darrell Crate: You know what? If we don't get the support from the capital markets and continue to have this 8% dividend, we can still meet these growth targets. I mean, we've built enough tools. We have strong JV partners. We're gonna be able to deliver that value. Of course, with a lower cost of capital, we're excited, the team is excited, and our disposition is to really accelerate the growth of the company. The team is very aligned in achieving those objectives consistently for a bunch of years.

Speaker #5: And you know what? And if we don't get the support from the capital markets and continue to have this 8% dividend, we can still meet these growth targets.

Speaker #5: I mean, we've built enough tools. We have strong JV partners. So we're going to be able to deliver that value. But of course, with lower cost of capital, we're excited, as the team is excited.

Speaker #5: And our disposition is to really accelerate the growth of the company. And the team is very aligned in achieving those objectives consistently for a bunch of years.

Speaker #3: Thank you. Our next question is from Michael Lewis of Truist Securities. Please proceed with your question.

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

Michael Lewis: Thank you. Regarding the mezzanine loan investments, is this now, like, the preferred way to do developments, you know, rather than the large cash outlays and the reimbursement later? You know, does it make sense to do more with developers, and then you become the takeout on the back end? You know, should we expect you to do more of that and less of the other? It's a good question. I mean, I think it really depends. It depends on the project.

Speaker #10: Thank you. Regarding the mezzanine loan investments, is this now the preferred way to do developments, rather than the large cash outlays and the reimbursement later?

Speaker #10: Does it make sense to do more with developers, and then you become the takeout on the back end? Should we expect you to do more of that and less of the other?

Speaker #5: It's a good question. I mean, I think it really depends. It depends on the project. In that you look at these FDA labs. There's seven more to be built and we've built three of them.

Daryl Craig: You know, in that you look at these FDA labs, there's seven more to be built, and we've built three of them, and each one has been a better value for the government because they've been terrific collaborators with the same team, you know, on each of those three buildings, and we've been able to get really into stride of how to save money. I mean, there's 35,000 miles of pipe and wire and all sorts of things that go into it. We kind of figured it out. That said, I think that we can build the lowest cost FDA labs and highest quality for the US government, we should be doing exactly that.

Darrell Crate: You know, in that you look at these FDA labs, there's seven more to be built, and we've built three of them, and each one has been a better value for the government because they've been terrific collaborators with the same team, you know, on each of those three buildings, and we've been able to get really into stride of how to save money. I mean, there's 35,000 miles of pipe and wire and all sorts of things that go into it. We kind of figured it out. That said, I think that we can build the lowest cost FDA labs and highest quality for the US government, we should be doing exactly that.

Speaker #5: And each one has been a better value for the government because they've been terrific collaborators with us. Same team on each of those three buildings.

Speaker #5: And we've been able to really get into a stride of how to save money. I mean, there's 35,000 miles of pipe and wire and all sorts of things that go into it.

Speaker #5: And so we kind of figured it out. That said, I think that we can build the lowest-cost FDA labs and highest quality for the U.S. government.

Speaker #5: So we should be doing exactly that. I think you look at some of these VAs—while we can build them well, there are one, two, three, four, five developers that have done a terrific job in this space.

Daryl Craig: I think you look at some of these VAs, while we can build them well, there are one, two, three, four, five developers, that have done a terrific job in this space. For us, the idea of competing with five quality developers, spending the search costs to do it, we might as well let one of those high-quality folks win, stand really close to them while they're building the project. I think that creates more value for our shareholders.

Darrell Crate: I think you look at some of these VAs, while we can build them well, there are one, two, three, four, five developers, that have done a terrific job in this space. For us, the idea of competing with five quality developers, spending the search costs to do it, we might as well let one of those high-quality folks win, stand really close to them while they're building the project. I think that creates more value for our shareholders.

Speaker #5: And for us, the idea of competing with five quality developers, spending the search costs to do it—we might as well let one of those high-quality folks win, stand really close to them while they're building the project.

Speaker #5: And end up, I think that creates more value for our shareholders. So when you look at Medford, Oregon, or you look at Flagstaff, we're very good at building courthouses.

Daryl Craig: When you look at Medford, Oregon, or you look at Flagstaff, we're very good at building courthouses, and these are courthouses that are in areas where there was, you know, this was not a, you know, a major metropolitan courthouse where we may have found ourselves with a high-cost competition, you know, with 11 other developers. You know, the folks who are running the procurement understood Easterly, understood the value that we deliver. They're in markets where, you know, the competition was less familiar with these types of assets. In those cases, us doing development from start to finish was the way to go.

Darrell Crate: When you look at Medford, Oregon, or you look at Flagstaff, we're very good at building courthouses, and these are courthouses that are in areas where there was, you know, this was not a, you know, a major metropolitan courthouse where we may have found ourselves with a high-cost competition, you know, with 11 other developers. You know, the folks who are running the procurement understood Easterly, understood the value that we deliver. They're in markets where, you know, the competition was less familiar with these types of assets. In those cases, us doing development from start to finish was the way to go.

Speaker #5: And these are courthouses that are in areas where this was not a major metropolitan courthouse, where we may have found ourselves in a high-cost competition with 11 other developers.

Speaker #5: The folks who are running the procurement understood Easterly, understood the value that we deliver. They're in markets where the competition was less familiar with these types of assets.

Speaker #5: And in those cases, us doing development from start to finish was the way to go. So sorry for all the explanation, but it's really the answer to your question.

Daryl Craig: Sorry for all the explanation, it is really the answer to your question, and it is just about trying to use our expertise to deliver the most value for the shareholders with each of these very high-quality projects. They are terrific because you end up with a 20-year lease and find yourselves in a place where you really have, you know, significant government cash flows for years to come.

Darrell Crate: Sorry for all the explanation, it is really the answer to your question, and it is just about trying to use our expertise to deliver the most value for the shareholders with each of these very high-quality projects. They are terrific because you end up with a 20-year lease and find yourselves in a place where you really have, you know, significant government cash flows for years to come.

Speaker #5: And it's just about trying to use our expertise to deliver the most value for the shareholders with each of these very high-quality projects. And they're terrific, because you end up with a 20-year lease.

Speaker #5: And find yourselves in a place where you really have significant government cash flows for years to come.

Speaker #9: No, that's great. Thank you. And then, just lastly from me—you kind of alluded to, I think, a little bit of conservatism, maybe, in the acquisition guidance and the FFO guidance.

Michael Lewis: No, that's great. Thank you. Then just lastly from me, you kind of alluded to, I think, a little bit of conservatism maybe in the acquisition guidance and the FFO guidance. You know, if we annualize the Q1 results, it gets you to $3.10 for the year. The midpoint of the range is $3.09. I guess the question is just, you know, is that it? Is it just a little bit of conservatism, or are there any drags through the rest of the year, you know, why you wouldn't have any sequential growth?

Speaker #9: If we annualize the first quarter results, it gets you to $3.10 for the year. The midpoint of the range is $3.09. I guess the question is just, is that it?

Speaker #9: Is it just a little bit of conservatism? Or are there any drags through the rest of the year why you wouldn't have any sequential growth?

Speaker #5: Yeah, Alison?

Daryl Craig: Allison?

Darrell Crate: Allison?

Speaker #4: Yeah. So, a few things. One, as you can imagine—and even as we've seen in the markets recently—interest rates are really wacky right now. I think there's increased short-term volatility that we're seeing.

Allison Marino: Yeah. A few things. One, as you can imagine, or, and even seen in the markets recently, interest rates are, like, really wacky right now. I think there's increased short-term volatility that we are seeing, with respect to both SOFR and all of the versions of Treasury we like to play in. A little bit of our conservatism is really driven by the fact that we need to see if some of that volatility calms down, which would allow us to improve our cost of capital as the year goes on and strategically look to the debt markets to term out the revolver. That's a big piece of uncertainty. I don't think we sat here 2 months ago and necessarily felt that way, but I don't think we are in poor company today with that concern either.

Speaker #4: With respect to bolts so far, and then all of the versions of Treasury we like to play in, a little bit of our conservatism is really driven by the fact that we need to see if some of that volatility calms down.

Speaker #4: This would allow us to improve our cost of capital as the year goes on and strategically look to the debt markets to term out the revolver.

Speaker #4: So that's a big piece of uncertainty. I don't think we sat here two months ago and necessarily felt that way. But I don't think we are in poor company today with that concern either.

Speaker #4: So that's a big piece of the puzzle. As we move throughout the remainder of the year, obviously, as developments come online, timing is a very large piece of what underpins our guidance range.

Allison Marino: That's a big piece of the puzzle. As we move throughout the remainder of the year, obviously, as developments come online, timing is a very large piece of what underpins our guidance range. If, you know, the earlier in Q4 or the closer to the beginning of Q4 we are able to deliver the FDLE lab in Florida, the more improvement in our guidance range you might see. We're still, you know, these are the critical six months here of being close enough to see it on the horizon and be excited about an opening party, but still far enough where there's development risk left. We will continue to, as we march closer to that, evaluate its final projection of delivery as well.

Speaker #4: So, if the earlier in Q4, or the closer to the beginning of Q4, we are able to deliver the FDLE lab in Florida, the more improvement in our guidance range you might see.

Speaker #4: But we're still—these are the critical six months here of being close enough to see it on the horizon and be excited about an opening party, but still far enough where there's development risk left.

Speaker #4: So we will continue to, as we march closer to that, evaluate its final projection of delivery as well.

Speaker #9: Okay. And actually, maybe I'll throw in one more, because since I asked kind of a guidance question about '26. I know you're not going to give guidance for '27.

Michael Lewis: Okay. Actually, maybe I'll throw in one more 'cause since I asked kind of a guidance question about 2026. I know you're not gonna give guidance for 2027. You said you're excited about it. You know, the consensus number for FFO is the same as it is for 2026. Is there anything you could say about, you know, the, you know, what excites you about 2027 and the, you know, the growth potential there?

Speaker #9: You said you're excited about it. The consensus number for FFO is the same as it is for '26. Is there anything you could say about what excites you about '27 and the growth potential there?

Speaker #5: I mean, I think if you look at all the tools that we've created, and you look at the opportunity set that we're harvesting, the idea of us being flat next year would make no sense.

Daryl Craig: I mean, I think if you look at all the tools that we've created, and you look at the opportunity set that we're harvesting, the idea of us being flat next year, would make no sense.

Darrell Crate: I mean, I think if you look at all the tools that we've created, and you look at the opportunity set that we're harvesting, the idea of us being flat next year, would make no sense.

Speaker #5: So that's my point. We have an FAA lab that's finally these guys are going to leave. I mean, it's been eight years that they're there.

Michael Lewis: Okay

Daryl Craig: so that's my point. We have an FDA lab that finally these guys are gonna leave. I mean, it's been 8 years that they're there. That's a little bit of a drag. Everything else that we're doing from re-leasing to vacant space, to MEZZ debt, to harvesting a pipeline. Allison's got it just right. Look, it's Q1 of 2026, so not fair to look out. We have more stable cash flows than every other REIT out there. As we're looking forward, we are, you know, feeling a level of optimism. As things unfold here over the next 6 months, I think that we're gonna be able to be very specific about where we're going for the year.

Darrell Crate: so that's my point. We have an FDA lab that finally these guys are gonna leave. I mean, it's been 8 years that they're there. That's a little bit of a drag. Everything else that we're doing from re-leasing to vacant space, to MEZZ debt, to harvesting a pipeline. Allison's got it just right. Look, it's Q1 of 2026, so not fair to look out. We have more stable cash flows than every other REIT out there. As we're looking forward, we are, you know, feeling a level of optimism. As things unfold here over the next 6 months, I think that we're gonna be able to be very specific about where we're going for the year.

Speaker #5: That's a little bit of a drag. But everything else that we're doing—from releasing to vacant space to MESDET to harvesting a pipeline—and Allison's got it just right.

Speaker #5: Look, it's the first quarter of 2026. So, it's not fair to look out. But we have more stable cash flows than every other REIT out there.

Speaker #5: So, as we're looking forward, we are feeling a level of optimism. And as things unfold here over the next six months, I think that we're going to be able to be very specific about where we're going for the year.

Daryl Craig: With all these tools and the team really reoriented towards growth, everyone understands what they need to do. God knows we've said it enough that we're gonna grow 2% to 3% a year. We've done it for 2 years now. If we hit the middle of our guidance this year, we're gonna be there as well. We believe that that's our plan for the next handful of years to grow at that pace.

Speaker #5: But with all these tools and the team really reoriented towards growth, everyone understands what they need to do. And God knows we've said it enough that we're going to grow 2% to 3% a year.

Darrell Crate: With all these tools and the team really reoriented towards growth, everyone understands what they need to do. God knows we've said it enough that we're gonna grow 2% to 3% a year. We've done it for 2 years now. If we hit the middle of our guidance this year, we're gonna be there as well. We believe that that's our plan for the next handful of years to grow at that pace.

Speaker #5: We've done it for two years now. If we hit the middle of our guidance this year, we're going to be there as well. And we believe that that's our plan for the next handful of years to grow at that pace.

Michael Lewis: Okay. I understand Allison not wanting to give the guidance, right? A much bigger refi year next year than this year.

Speaker #9: Okay. I understand, Allison, not wanting to give the guidance, right? A much bigger refi year next year than this year. So, if interest rates are uncertain, and they're more uncertain for next year...

Daryl Craig: Look, yeah.

Michael Lewis: You know, if interest rates are uncertain, they're uncer-more uncertain for next year. Um, so thank you.

Speaker #9: So thank you.

Speaker #5: Yeah, so that's why we can't give guidance. But I certainly would love to, but Allison won't let me.

Daryl Craig: Yeah. So that's why we can't give guidance. But, uh, you know, I certainly would love to, but Allison won't let us.

Darrell Crate: Yeah. So that's why we can't give guidance. But, uh, you know, I certainly would love to, but Allison won't let us.

Speaker #9: Thank you.

Michael Lewis: Thank you.

Speaker #2: Thank you. I would now like to turn the conference back to Darrell Crate, President and CEO of Easterly Government Properties, for closing remarks.

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

Speaker #5: Great, really appreciate you joining for this for the conference call. As we share our first quarter earnings, we're very excited about, obviously, what we're doing.

Daryl Craig: Great. Really appreciate you joining for this, for the conference call, as we share our Q1 earnings. We're very excited about obviously what we're doing. We're very excited about our growth. We are, we really look forward to you paying attention to the company, spending some time with us. We appreciate the partnership. We look forward to getting together at this time in about 3 months.

Darrell Crate: Great. Really appreciate you joining for this, for the conference call, as we share our Q1 earnings. We're very excited about obviously what we're doing. We're very excited about our growth. We are, we really look forward to you paying attention to the company, spending some time with us. We appreciate the partnership. We look forward to getting together at this time in about 3 months.

Speaker #5: We're very excited about our growth, and we really look forward to you paying attention to the company and spending some time with us.

Speaker #5: We appreciate the partnership, and we look forward to getting together at this time in about three months.

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

Q1 2026 Easterly Government Properties Inc Earnings Call

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