Easterly Government Properties Agrees to Buy 1.5 MSF Government-Leased Office Portfolio for $430M
WASHINGTON, D.C. — Easterly Government Properties (NYSE: DEA) has agreed to purchase a 14-property office portfolio across the United States for $430 million. The nearly 1.5 million-square-foot portfolio is 94 percent leased by the U.S. government and 99 percent leased overall. The seller was undisclosed.
“We believe the acquisition of this portfolio is a wonderful opportunity for the company,” says William C. Trimble III, CEO of Easterly. “This acquisition is expected to grow our portfolio by approximately 39 percent on a rentable-square-foot basis, while still maintaining the same high-quality standard of assets Easterly is known for.”
The portfolio includes the following assets:
• A 267,766-square-foot office building in Buffalo, N.Y., housing Department of Veterans Affairs (VA), Internal Revenue Service (IRS) and a regional office for the National Labor Relations Board
• A 239,331-square-foot building next to Chicago O’Hare International Airport that houses the Federal Aviation Administration’s (FAA) Great Lakes Regional Office and the U.S. Department of Agriculture (USDA)
• A 225,057-square-foot facility in Portland, Ore.’s Central City Plan District housing the USDA, U.S. Army Corp of Engineers (ACOE), Federal Bureau of Investigation (FBI) and the Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF)
• A 182,500-square-foot build-to-suit property in Parkersburg, W.Va., that is 100 percent leased to the General Services Administration (GSA) for the use of the Bureau of Fiscal Service (BFS), which is a division of the U.S. Department of Treasury
• A 110,000-square-foot facility in Charleston, W.Va., occupied by the Office of Hearings Operations (OHO), a part of the Social Security Administration (SSA)
• A 100,054-square-foot building in Pittsburgh housing one of the FBI’s 56 regional field offices
• An 80,677-square-foot office and laboratory building within the University of Maryland’s Research Park in College Park, Md., housing Center for Food Safety and Applied Nutrition (CFSAN)
• A 63,760-square-foot federal center in Clarksburg, W.Va., housing the FBI, DEA, SSA, Offices of the U.S. Attorneys and Small Business Association (SBA)
• Josiah House, a historic, 60,500-square-foot courthouse in Charleston, S.C.
• A 49,692-square-foot building in Sterling, Va., housing the DEA
• A 33,425-square-foot facility in Pittsburgh housing the U.S. Immigration and Customs Enforcement (ICE)
• A 30,000-square-foot VA outpatient medical office facility in Baton Rouge, La.
• A 27,200-square-foot facility in Dallas leased to the GSA for use by the SSA
• A 9,800-square-foot facility in Bakersfield, Calif., that houses the Bakersfield Resident Office for the DEA’s San Francisco division
About 88 percent of the U.S. government leases are still under their original lease contracts and 79 percent are build-to-suit or renovation-to-suit construction. The portfolio’s weighted average lease expiration is for 3.8 years.
Easterly expects to close the acquisition of these properties on a rolling basis between July and December of this year.
To help fund the acquisition, Easterly is starting a public offering of 18 million shares of its common stock at $19.25 per share, which the company expects to generate approximately $346.5 million in proceeds.
The Washington, D.C.-based investor also recently replaced an existing senior unsecured revolving credit facility with a new credit facility totaling $600 million funded by Citibank, PNC Capital Markets and Wells Fargo Bank.
Along with the previously announced pending acquisition of VA – San Jose and completed acquisition of VA – Golden, Easterly’s acquisitions total approximately $514.9 million since the start of 2018.
Easterly Government Properties focuses on the acquisition and development of assets leased by the U.S. government. The REIT’s stock price closed on Monday, June 18 at $19.74 per share, down from $20.96 a year ago.
— John Nelson