Easterly Government Is On Track To Become A Blue Chip REIT

I am maintaining a BUY recommendation and I expect this REIT to generate returns going forward in the range of 12-14%.

Summary

  • DEA's portfolio is around 97% backed by the U.S. government and the GSA has never financially defaulted on a lease throughout its history.
  • DEA’s Board recently declared a dividend related to Q3-7 operations of $0.26 per share.
  • Since Q3-16, DEA has grown its FFO by 7%, while extending the duration of liabilities and maintaining a conservative balance sheet.

I first recommended shares in Easterly Government Properties (DEA) Back in July 2015, and I continue to maintain bullish sentiment on this REIT that focuses on investing in U.S. government-leased buildings.

I have continued coverage on DEA and I have been pleased with the progress of the company, and in a recent article I explained:

“The term "full faith and credit" is used to describe the unconditional guarantee or commitment by one entity to back the interest and principal of another entity's debt. This "full faith and credit" commitment is typically employed by a government to help lower the borrowing costs of a smaller, less stable government or a government-sponsored agency.”

It is generally accepted that the U.S. government will never default on its loan obligations and these words "full faith and credit" have tremendous value as the phrase describes the unconditional guarantee or commitment behind America's credit quality.

The U.S. government is the largest employer in the world and the largest office tenant in the U.S. DEA is the only internally managed REIT with a focus on investing in U.S. government-leased buildings. The other direct peer is Government Properties Income Trust (NYSE: GOV), an externally advised REIT.

Favorable Acquisition Environment

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