DEA

• Portfolio Quality & Differentiation: The company owns purpose-built, mission-critical facilities leased primarily to U.S. federal agencies, high-credit state/municipal tenants, and defense-related entities. Leases are long-duration and mostly backed by the full faith and credit of the U.S. government, creating strong differentiation from traditional office real estate and high tenant stickiness for integral, hard-to-replicate assets. The portfolio delivered 5.4% year-over-year core FFO per share growth, exceeding the company's 2-3% long-term target.
• Capital Markets & Balance Sheet: The company closed a new $200 million five-year unsecured term loan facility during the quarter with a $50 million accordion feature and pricing (130 basis points over SOFR) better than initial expectations. Proceeds were used to pay down the revolving credit facility, increasing available liquidity for future growth. Net debt to annualized quarterly EBITDA currently stands at 7.3x, down from Q1 2026, reflecting steady progress toward medium-term deleveraging targets. The company is working toward obtaining an additional investment grade rating in 2027, which is expected to lower future cost of debt capital.
• Development Pipeline Activity: Three active development projects (the FDLE lab facility in Fort Myers, FL; U.S. Courthouse in Flagstaff, AZ; U.S. Courthouse in Medford, OR) are progressing on schedule, with the FDLE facility on track for delivery by the end of 2026. Agreed lump-sum reimbursements for these projects will support further deleveraging, followed by incremental EBITDA growth once leases commence. The company maintains a $1.5 billion total pipeline of acquisition and development opportunities.
• Strategic Positioning: Year-to-date share price performance has improved, bringing more pipeline opportunities in line with the company's return thresholds for accretive external growth. The company has built this pipeline over several years and expects to begin converting opportunities in the coming quarters as the equity valuation improves.

• The company raised its full-year 2026 core FFO per share guidance range by 1 cent at the midpoint, resulting in a revised range of $3.07 to $3.13, up from the prior range of $3.08 to $3.12.
• Full-year 2026 guidance assumes $50 to $100 million in gross development-related investment and $50 million in wholly owned acquisitions for the year.
• The company reaffirms its long-term target of 2-3% annual core FFO per share growth, with the potential to accelerate growth if the company achieves its investment grade rating and equity valuations continue to improve.
• Full-year maintenance capex is still expected to fall in the range of $1.50 to $2 per square foot, despite Q2 seasonally higher spending.

Easterly Government Properties is a single-segment REIT focused on owning government-leased mission-critical real estate. Total Q2 2026 revenue was $92.4 million, a 10% year-over-year increase from $84.2 million in Q2 2025. Q2 2026 EBITDA was $58.4 million, an approximately 8% year-over-year increase from $54.3 million in the prior year quarter. Fully diluted net income per share was 7 cents. FFO per share and core FFO per share both came in at 78 cents, representing 5% year-over-year growth from 74 cents in Q2 2025. Cash available for distribution for the quarter was approximately $25.8 million. Portfolio-level operational metrics for the full segment: occupancy stood at 98%, with a weighted average lease term of 9.2 years, both outperforming office REIT peer averages.

• The current interest rate environment remains challenging and volatile, driven in part by ongoing geopolitical uncertainty.
• Government agency lease moving and renewal processes can experience delays, as seen with the expected FAA move-out that has already faced timeline extensions.
• Transaction activity in the acquisition pipeline depends on seller urgency and favorable equity pricing relative to return thresholds, with opportunities only becoming viable if the company's share price reaches target ranges.
• Upcoming lease expirations (with a peak scheduled for 2028) carry inherent renewal and re-leasing risk, though management expects outcomes to align with historical forecasts.
• The company cannot guarantee it will achieve its targeted additional investment grade rating in 2027, which would impact expected future cost of capital improvements.
• Forward-looking outcomes are not guaranteed, and actual results may differ materially from expectations due to a variety of uncontrollable factors, as disclosed in the company's SEC filings.

Q: Given the approaching inflection point for the $1.5 billion pipeline as share prices rise, what is the expected cadence of deal activity into late 2026 and 2027, and what is the mix of development, acquisitions, and mezzanine opportunities? / A: Management stated that at a share price of $24.50 to $25.50, small transactions meeting the 100 basis point premium to cost of capital requirement become achievable. At $26 to $27, material deal volume of a couple hundred million dollars becomes possible, and at $28 to $30, acquisition volume can exceed historical levels. The mezzanine financing program is still targeted to grow to $30 million to $50 million total, with opportunities tied to pending lease awards and focused on trusted developers with assets the company would want to own long-term, serving as a bridge to future portfolio acquisitions. (398 characters)

Q: How does management frame its cost of equity, and what are the plans for recapitalizing the maturing Loma Linda mortgage next summer? / A: Management primarily issues equity to match acquisition funding timing, and no additional equity is required to meet current deleveraging targets, as project delivery will naturally reduce leverage. For the $127.5 million Loma Linda mortgage maturing in summer 2027, the primary plan is to refinance via unsecured investment grade issuance once the company obtains its target rating, and the company has enough revolving credit capacity to hold the debt temporarily if needed. Planning is already underway to structure related leases to be attractive to public markets. (382 characters)

Q: How has the $1.5 billion pipeline evolved, and what is the targeted asset mix for closing deals going forward? / A: The total pipeline size remains surprisingly stable, with $100 million to $200 million of annual rotation of opportunities in and out. The company passed on one recent high-quality deal that fell 60-75 basis points short of return requirements. The target mix for new activity is 50% GSA federal assets and 50% alternative assets (state/local, government-adjacent), with the goal of growing the alternative share to 30% of the total portfolio to capture 2-3% annual rent escalators that boost same-store growth by 60-90 basis points. (356 characters)

Q: How are you approaching joint venture partnerships as an alternative funding source for pipeline opportunities, and is there a plan for a formal fund structure? / A: Management maintains existing relationships with sovereign wealth partners and has cultivated new JV relationships over the past six months. As the largest U.S. government landlord with deep sector expertise, Easterly is an attractive partner for investors seeking high-quality AA+ government-backed rent streams. Rather than one-off deals, management expects programmatic, consistent JV activity, similar to a prior $600-$700 million VA-focused JV program. Large portfolio dispositions to fund growth are not planned. (327 characters)

Q: What is the latest update on the expected FAA move-out in October, and the status of upcoming lease expirations? / A: FAA will definitely remain in the property through the end of the October lease term, and a timeline update is expected within the next month. Management advised not to model extra extended revenue at this time, but there is optimism the move could be delayed. For upcoming lease expirations through 2027, lease procurement processes are already active for most expirations, and management expects outcomes to align with forecasts of mid-to-high teens renewal rate and $35 per square foot average TI/BSAC. (311 characters)