Easterly Government Properties Announces New $400 Million Senior Unsecured Credit Facility
Easterly Government Properties (NYSE: DEA) announced a new $400 million revolving credit facility (Revolver) with an accordion feature allowing for additional lender commitments up to $250 million, totaling up to $650 million. The Revolver matures in June 2028 with two six-month extension options to June 2029. Borrowings will bear interest at Adjusted SOFR plus a spread of 1.20% to 1.80%, initially set at 1.35% due to the current leverage ratio. Funds will be used for acquisitions, development, and other corporate purposes. The previous revolving credit facility due to expire in July 2025 will be replaced by this new facility. Citibank, PNC Capital Markets, Truist Securities, and Wells Fargo Securities served as joint lead arrangers and bookrunners, with Citibank as the administrative agent.
- New $400 million revolving credit facility enhances Easterly's liquidity.
- Accordion feature allows for additional commitments up to $250 million, totaling up to $650 million.
- Revolver matures in June 2028 with options to extend to June 2029.
- Interest rate set at Adjusted SOFR plus 1.20% to 1.80%, initially at 1.35%.
- Funds can be used for acquisitions, development, and corporate purposes.
- New facility replaces the previous one expiring in July 2025.
- Revolver execution demonstrates strong lending relationships with major banks.
- Increased leverage may pose financial risk if not managed properly.
- Higher interest expenses due to the spread over Adjusted SOFR.
- Extension options may delay debt repayment, affecting future financial health.
Insights
From a financial perspective, the new $400 million revolving credit facility is a significant move for Easterly Government Properties. This facility enhances the company's liquidity and provides substantial capital for future growth through acquisitions and development. The option to extend the credit facility up to $650 million with the accordion feature offers further financial flexibility. Such a facility is a positive signal to investors, indicating that the company has a strong relationship with its lenders and the backing of major financial institutions.
The interest rate set at Adjusted SOFR plus 1.35% aligns with industry standards and reflects the company's current leverage ratio. This is an attractive rate given the current market conditions and should help manage Easterly's cost of capital effectively. The extension of the term to 2028 with options to extend to 2029 offers stability and predictability in financial planning.
For investors, this move underscores the company's proactive approach in securing funding and maintaining operational flexibility. It also indicates confidence in the company's future growth plans and its ability to execute them effectively.
From a real estate standpoint, the new revolving credit facility empowers Easterly Government Properties to continue its strategy of acquiring and managing Class A commercial properties leased to the U.S. Government. The increased liquidity supports the company’s potential for strategic acquisitions and development projects, which are important for maintaining and expanding its portfolio.
The ability to leverage up to $650 million if needed provides a significant buffer for future large-scale projects and renovations, ensuring that the company's assets remain competitive and high-quality. This could potentially lead to higher rental incomes and better occupancy rates, given the stable and reliable nature of government leases.
For investors, the secured credit facility reassures that Easterly is well-positioned to capitalize on market opportunities without compromising financial stability. It's a positive development that aligns with long-term growth and stability in the real estate sector, particularly within the government-leased property niche.
~ Easterly demonstrates its ability to access capital and maintain ample liquidity to fund future growth ~
Borrowings under the Revolver will bear interest at a rate of Adjusted SOFR plus a spread of
The Company intends to use borrowings under the Revolver for general corporate purposes, including but not limited to acquisitions, development, redevelopment and other capital expenditures. All outstanding borrowings on the Company’s previous revolving credit facility that was set to expire in July 2025 will be assumed under the newly executed Revolver.
“We are pleased to extend the Company’s lending relationships with the recast of this revolving credit facility,” said Allison Marino, Easterly’s Chief Financial and Accounting Officer. “Through this execution, Easterly has extended the term of lender commitments and secured liquidity to ensure ample flexibility as we continue to pursue accretive capital deployment opportunities.”
Citibank, N.A., PNC Capital Markets LLC, Truist Securities and Wells Fargo Securities, LLC served as joint lead arrangers and joint bookrunners on the Revolver. Citibank, N.A. served as administrative agent, and PNC Bank, National Association, Truist Securities and Wells Fargo Bank, N.A. served as co-syndication agents.
About Easterly Government Properties, Inc.
Easterly Government Properties, Inc. (NYSE:DEA) is based in
Forward Looking Statements
This press release contains forward-looking statements within the meaning of federal securities laws and regulations. These forward-looking statements are identified by their use of terms and phrases such as “believe,” “expect,” “intend,” “project,” “anticipate,” “position,” and other similar terms and phrases, including references to assumptions and forecasts of future results. Forward-looking statements are not guarantees of future performance and involve known and unknown risks, uncertainties and other factors which may cause the actual results to differ materially from those anticipated at the time the forward-looking statements are made. These risks include, but are not limited to, those risks and uncertainties associated with our business described from time to time in our filings with the Securities and Exchange Commission, including our Annual Report on Form 10-K filed on February 27, 2024. Although we believe the expectations reflected in such forward-looking statements are based upon reasonable assumptions, we can give no assurance that the expectations will be attained or that any deviation will not be material. All information in this release is as of the date of this release, and we undertake no obligation to update any forward-looking statement to conform the statement to actual results or changes in our expectations.
View source version on businesswire.com: https://www.businesswire.com/news/home/20240604030315/en/
Easterly Government Properties, Inc.
Lindsay S. Winterhalter
Senior Vice President, Investor Relations and Operations
202-596-3947
IR@easterlyreit.com
Source: Easterly Government Properties, Inc.
FAQ
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