Easterly Government Properties Announces New $400 Million Senior Unsecured Credit Facility

Rhea-AI Summary

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.

Positive

• 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.

Negative

• 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

Financial Analyst

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.

Real Estate Expert

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 ~

WASHINGTON--(BUSINESS WIRE)-- Easterly Government Properties, Inc. (NYSE: DEA) (the “Company” or “Easterly”), a fully integrated real estate investment trust focused primarily on the acquisition, development and management of Class A commercial properties leased to the U.S. Government, today announced it has executed a new $400 million revolving credit facility (the “Revolver”). The Revolver includes an accordion feature that allows the Company to request additional lender commitments of up to $250 million, for a total Revolver capacity of up to $650 million. The Revolver will initially mature four years from the closing date, in June 2028, with two six-month as-of-right extension options available to extend the maturity to June 2029.

Borrowings under the Revolver will bear interest at a rate of Adjusted SOFR plus a spread of 1.20% to 1.80%, depending on the Company’s leverage ratio. Given the Company's current leverage ratio, the initial spread to Adjusted SOFR is set at 1.35%.

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 Washington, D.C., and focuses primarily on the acquisition, development and management of Class A commercial properties that are leased to the U.S. Government. Easterly’s experienced management team brings specialized insight into the strategy and needs of mission-critical U.S. Government agencies for properties leased to such agencies either directly or through the U.S. General Services Administration (GSA). For further information on the company and its properties, please visit www.easterlyreit.com.

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

What is the new credit facility announced by Easterly Government Properties (DEA)?

Easterly announced a $400 million revolving credit facility with an option to increase commitments up to $650 million.

When does the new $400 million credit facility for Easterly Government Properties mature?

The new credit facility matures in June 2028, with two six-month extension options to June 2029.

What is the interest rate for borrowings under Easterly's new credit facility?

Borrowings will bear interest at Adjusted SOFR plus a spread of 1.20% to 1.80%, initially set at 1.35%.

What will Easterly Government Properties use the new credit facility for?

The funds will be used for acquisitions, development, redevelopment, and other corporate purposes.

Which banks served as joint lead arrangers for Easterly's new revolving credit facility?

Citibank, PNC Capital Markets, Truist Securities, and Wells Fargo Securities served as joint lead arrangers.