Easterly Government Properties (NYSE:DEA) reported third-quarter 2026 core funds from operations growth and raised the low end of its full-year guidance, while outlining a 2027 outlook that incorporates refinancing pressure and the expected departure of a Federal Aviation Administration tenant in Chicago.
President and CEO Darrell Crate said the company delivered 2.6% year-over-year growth in core FFO per share during the quarter, within its stated long-term target of 2% to 3%. He said the midpoint of the company’s 2026 guidance implies approximately 4% growth, exceeding that long-term objective.
“We continue to execute our strategy by growing earnings steadily, allocating capital thoughtfully, and improving the quality of our portfolio over time,” Crate said.
Third-Quarter Results
Executive Vice President and CFO Allison Marino said total revenue rose 8.7% year over year to $93.6 million, from $86.2 million in the third quarter of 2025. The increase reflected acquisitions and development completed during the past 12 months, lease renewals, and tenant-improvement and building-specific amortization and capital income.
EBITDA increased 8.9% to $59 million, compared with $54.2 million a year earlier. Net income was $0.12 per diluted share.
- FFO was $0.79 per share, up from $0.74 in the prior-year quarter.
- Core FFO was $0.78 per share, compared with $0.76 a year earlier.
- Cash available for distribution totaled approximately $32.8 million.
Marino said FFO exceeded core FFO in the quarter because of a downward adjustment to the company’s credit-loss allowance related to repayment of the Bedford loan.
The company ended the quarter 98% leased, with a weighted average lease term of 9.2 years. Easterly also reduced the portion of annualized lease income subject to early termination rights, or soft term, to 2.3% at quarter-end from 5.2% at the end of 2024.
Leasing and Development Updates
Easterly completed its 2026 lease rollover activity with the renewal of USCIS Lincoln. Marino said the lease has a 15-year term, including 10 years of firm term. Management plans to provide details on the broader 2026 renewal class with its year-end results.
For upcoming renewals, Marino said the company continues to expect mid- to high-teens net effective rental growth for 2027 and 2028 expirations. The company is seeking as much firm term as possible, with 10 to 15 years generally achievable on renewals, she said.
The company also extended the lease at its FAA Chicago property by nine months, including six months of firm term. Easterly expects the tenant to vacate the facility, which remains under contract for sale upon move-out. The extension is expected to contribute incremental earnings in 2026 and 2027, though management’s guidance assumes occupancy only through the firm term ending April 20, 2027.
On development, significant construction activity at the FDLE laboratory facility in Fort Myers, Florida, was completed during the month. The company said it broke ground on the project in August 2025 and delivered it in 15 months.
Construction of a U.S. courthouse in Flagstaff, Arizona, remains on track for completion in the first quarter of 2027. A courthouse project in Medford, Oregon, is now expected to be completed in the first half of 2028, with Marino attributing the revised timing to a longer-than-anticipated government design process involving multiple agencies.
Guidance and Capital Priorities
Easterly raised the low end of its 2026 core FFO-per-share guidance to a range of $3.08 to $3.13, from its prior range of $3.07 to $3.13. The FAA Chicago extension was the primary driver of the increase, partially offset by the September repayment of a $35.6 million Bedford construction loan ahead of its August 2027 maturity.
The company used proceeds from the Bedford repayment to reduce borrowings under its revolving credit facility. Marino said the loan had contributed approximately $0.02 per share to the company’s prior 2027 expectations.
For 2027, Easterly introduced initial core FFO-per-share guidance of $3.09 to $3.17. The midpoint represents roughly 1% growth over the midpoint of 2026 guidance, while the high end represents roughly 2% growth. The outlook includes headwinds from the FAA Chicago move-out and refinancing-related pressure, particularly from the maturity of the company’s Loma Linda loan.
Management said its current plan is to place the Loma Linda maturity on its revolving credit facility. If the company succeeds in obtaining an additional investment-grade credit rating, it may instead use an inaugural investment-grade debt issuance. Crate said potential investment-grade issuance-related earnings accretion is not included in guidance.
At quarter-end, net debt to annualized quarterly EBITDA was 7.1 times, an improvement from the second quarter. Marino said the company is pursuing additional deleveraging while seeking an additional investment-grade rating.
Acquisition Pipeline and Market Conditions
Easterly’s 2027 guidance assumes $25 million to $50 million of gross development-related investment and approximately $50 million of fully owned acquisitions. Management said there could be additional acquisition upside as the year progresses, subject to disciplined underwriting and capital deployment.
Crate said the company continues to evaluate an approximately $1.5 billion pipeline and is recalibrating its cost of capital following recent moves in the 10-year Treasury rate. He said changing interest-rate expectations and approaching debt maturities may lead sellers to reassess pricing expectations.
“We are very hopeful that we will be able to find transactions that would be more accretive,” Crate said, adding that Easterly remains focused on cash generation, accretive investments and maintaining lease duration.
Marino also said the company continues to see opportunities to deploy mezzanine financing capital, particularly for Veterans Affairs outpatient clinic projects. Separately, Easterly entered into four interest-rate swaps at 4.2% on a SOFR base that are intended to cover most of 2027.
About Easterly Government Properties (NYSE:DEA)
Easterly Government Properties, Inc is a real estate investment trust (REIT) that acquires, develops, owns and manages properties leased primarily to government agencies. Its portfolio is focused on mission-critical facilities, including offices, medical and healthcare-related buildings, laboratories, courthouses and other specialized properties used by federal, state and local government tenants.
Founded in 2011 and headquartered in Washington, DC, Easterly became a publicly traded company in 2015.
