Easterly To Buy 14-Asset Portfolio For $430M

WASHINGTON, DC–Locally-based REIT Easterly Government Properties has agreed to acquire a 1.5-million-square foot portfolio of 14 assets for $430 million. The portfolio is 94% leased to the federal government and 99% leased overall. In addition, 79% of the properties are build-to-suit or renovation-to-suit.

Easterly says it believes that the portfolio’s weighted average underwritten cap rate is 6.5%.

It is a significant investment for the REIT as it will grow its portfolio by approximately 39% on a rentable square foot basis, according to CEO William C. Trimble III. According to Meghan G. Baivier, Easterly’s CFO and COO, “We are expecting to scale the company through an approximately 4% accretive deal to our run-rate FFO per share on a fully diluted basis.”

The company expects to close on a rolling basis between July and December of 2018.

The 14-property portfolio is located in the following locations, listed from largest to smallest by square foot:

Buffalo, NY A multi-tenanted Class A office building completed in 2004, which is primarily occupied by two federal agencies: the Department of Veterans Affairs and the Internal Revenue Service. The 267,766-square foot building also houses one of the National Labor Relations Board’s 26 regional offices. The weighted average lease expiration year is 2021. The US Government leases 94% of the 100% leased building.

Chicago, IL A 239,331-square foot, multi-tenanted office building fully renovated in 1999, which is located next to Chicago O’Hare International Airport and which serves as the Federal Aviation Administration’s Great Lakes Regional Office. The US Department of Agriculture also maintains a presence within the facility. The weighted average lease expiration year is 2020 and is 96% leased.

Portland, OR A Class A trophy multi-tenanted asset, built in 2002 and located within Portland’s Central City Plan District along the MAX light rail system. The facility is occupied by tenants such as the USDA, U.S. Army Corp of Engineers, Federal Bureau of Investigation and the Bureau of Alcohol, Tobacco, Firearms and Explosives. The 225,057-square foot facility is 100% leased with a weighted average lease expiration year of 2022.

Parkersburg, WV TREAS – Parkersburg, a 182,500-square foot build-to-suit property, was built in multiple phases in 2004 and 2006 and is 100% leased to the General Services Administration for the beneficial use of the Bureau of Fiscal Service through 2021. This mission critical agency within the US Department of Treasury has been located in Parkersburg since 1957 and currently occupies three buildings in the vicinity.

Charleston, WV SSA – Charleston, a 110,000-square foot single tenant facility fully renovated in 2000, is occupied by the Office of Hearings Operations, a part of the Social Security Administration. The Charleston hearing office services three SSA field offices in Ohio and nine SSA field offices in West Virginia. The space includes courtrooms, administrative offices and public service areas. The facility is 100% leased through 2019.

Pittsburgh, PA FBI – Pittsburgh serves as one of 56 FBI field offices located throughout the country. The 100,054-square foot facility was built-to-suit for the FBI in 2001 and is 100% leased until 2027. This facility oversees operations for nine surrounding resident agencies located throughout Pennsylvania and West Virginia.

College Park, MD FDA – College Park houses a laboratory for the Food and Drug Administration’s Center for Food Safety and Applied Nutrition , one of the FDA’s seven product-oriented centers. The 80,677-square foot office and laboratory was built-to-suit in 2004 and is 100% leased to the GSA for the FDA until 2029. The facility is part of the University of Maryland’s Research Park and is located two blocks from CFSAN headquarters in the Harvey W. Wiley Building, forming a campus which links university researchers, students and staff with federal laboratories and private sector companies.

Clarksburg, WV GSA – Clarksburg serves as a multi-tenanted federal center for various federal tenants within the market area, including the FBI, DEA, SSA, Offices of the U.S. Attorneys, and Small Business Association. This 100% leased 63,760-square foot build-to-suit facility was constructed in 1999 and serves the five tenant agencies through a single GSA lease, which expires in 2019.

Charleston, SC Courthouse – Charleston, an historic townhouse with a modern annex that, together with two adjacent federally-owned buildings, constitutes the federal judicial complex in Charleston. The original building dates to 1795 and was fully renovated in 1999 when the annex was constructed. The building, known as the Josiah House, contains three district judge courtrooms and four judges’ chambers. It is physically connected on the second floor to the J. Waties Waring Judicial Center. This 60,500-square foot federal courthouse is 100% leased through 2019.

Sterling, VA DEA – Sterling is a special testing and research laboratory to assist the DEA in performing mission critical forensic analyses. The 49,692-square foot facility was built-to-suit in 2001 and includes evidence rooms, computer labs, cryptography and various other specialized laboratories. The facility is 100% leased through 2020.

Pittsburgh, PA ICE – Pittsburgh, a state-of-the-art, build-to-suit facility constructed in 2004, is occupied by the US Immigration and Customs Enforcement. The Class A facility houses the Homeland Security Investigations division. This 33,425-square foot facility is located adjacent to the FBI – Pittsburgh field office, is 76% leased and has a weighted average lease expiration year of 2019.

Baton Rouge, LA VA – Baton Rouge, constructed in 2004, serves as a VA outpatient facility for Baton Rouge and the surrounding veteran population. This facility is one of two VA medical treatment facilities in Baton Rouge. Situated close to the largest private medical center in Louisiana, VA – Baton Rouge is 30,000-square feet in size and currently 100% leased to the VA through 2019.

Dallas, TX SSA – Dallas is a 27,200-square foot build-to-suit facility 100% leased to the GSA for SSA through 2020. Built in 2005, this facility serves as a local field office.

Bakersfield, CA DEA – Bakersfield is a build-to-suit facility that houses the Bakersfield Resident Office for the DEA’s San Francisco Division. This 9,800-square foot facility houses two holding cells, provides for secure and enclosed first floor parking and offers second story office space with secured rooms for weapons and drug storage. The facility was constructed in 2000 and is 100% leased through 2021.