WASHINGTON - Easterly Government Properties , Inc. (NYSE:DEA), a real estate investment trust that primarily focuses on properties leased to the U.S. Government, has announced the establishment of a new $400 million revolving credit facility. This facility, which includes an option to increase commitments up to $650 million, is set to initially mature in June 2028, with the possibility of a maturity extension to June 2029.
The interest rate for the borrowings under the new credit line will be based on the Adjusted Secured Overnight Financing Rate (SOFR) plus a spread ranging from 1.20% to 1.80%, determined by the company's leverage ratio. Currently, the spread is set at 1.35% given Easterly's leverage ratio at the time of the announcement.
Easterly intends to use the credit facility for a range of corporate purposes, which include acquisitions, development, redevelopment, and other capital expenditures. The company will also transfer all outstanding borrowings from its previous credit facility, which was due to expire in July 2025, to the new facility.
Allison Marino, Easterly’s Chief Financial and Accounting Officer, expressed satisfaction with the new financial arrangement, highlighting the extended term of lender commitments and the secured liquidity which will provide flexibility for the company's future capital deployment opportunities.
The credit facility was arranged with the collaboration of Citibank, N.A., PNC Capital Markets LLC, Truist Securities, and Wells Fargo Securities, LLC acting as joint lead arrangers and joint bookrunners. Citibank, N.A. served as the administrative agent, with PNC Bank, National Association, Truist Securities, and Wells Fargo Bank, N.A. acting as co-syndication agents.
Easterly, headquartered in Washington, D.C., specializes in acquiring, developing, and managing Class A commercial properties leased to various U.S. Government agencies, either directly or through the U.S. General Services Administration (GSA).
This financial move comes as part of Easterly's broader strategy to ensure it has the capital flexibility to support its growth and investment objectives. The announcement is based on a press release statement from Easterly Government Properties, Inc.
In other recent news, Easterly Government Properties experienced a minor boost in its Funds From Operations (FFO) guidance by $0.01 per share, as reported in its first-quarter 2024 earnings. Despite this slight uptick, RBC Capital maintained its underperform rating on the company's stock, highlighting concerns such as underfunded dividends and leverage metrics. In addition, Easterly secured $200 million in senior unsecured notes, a move attributed to the company's investment-grade balance sheet and high credit quality tenant base.
Further developments include the acquisition of two Orlando-based Department of Homeland Security facilities, which led to an increase in the company's full-year 2024 Core FFO per share guidance. The company now projects a Core FFO per share on a fully diluted basis to range between $1.15 and $1.17. In its first-quarter 2024 earnings call, Easterly emphasized a commitment to material earnings growth and operational efficiency, maintaining its full-year guidance and exploring cost-saving measures and acquisitions to drive growth.
These are some of the recent developments that investors may find noteworthy. It's important to note that these statements are based on the company's recent announcements and the analysis of RBC Capital, and actual results may vary.
InvestingPro Insights
In light of Easterly Government Properties, Inc.'s (NYSE:DEA) recent announcement about the establishment of a new $400 million revolving credit facility, key financial metrics and expert analysis from InvestingPro provide a deeper understanding of the company's current market position. With a market capitalization of $1.37 billion, Easterly's strategic financial planning is underpinned by its stable market presence.
InvestingPro data indicates that the company's Price-to-Earnings (P/E) ratio stands at a high 60.97, reflecting a premium that investors are willing to pay for its earnings, possibly due to its significant dividend yield of 8.9%, which is appealing to income-focused shareholders. This substantial dividend payout is a testament to Easterly's commitment to returning value to its investors and may be a factor in the company's ability to secure favorable terms for its credit facility.
Despite a slight decline in revenue growth over the last twelve months as of Q1 2024, by -0.79%, the company has maintained a strong gross profit margin of 64.83%, suggesting effective cost management relative to its revenue. This robust profitability, as indicated by a positive gross profit of $190.81 million, aligns with the optimism of analysts who, as one of the InvestingPro Tips notes, predict the company will be profitable this year. Additionally, the company has been profitable over the last twelve months, which reinforces the analysts' forecasts.
For investors seeking a more comprehensive analysis of Easterly Government Properties, InvestingPro offers additional insights and metrics. There are more InvestingPro Tips available, which can be accessed through InvestingPro. To enhance your investment strategy with these insights, use the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription.
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