Easterly Government Closes 9 in $205M Sale

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Easterly Government Properties Inc. sold nine assets and plans to sell the 10th in a portfolio of Class A commercial properties leased to U.S. government agencies for a total of $205.3 million in gross proceeds.

Nine of the properties in the 668,000-square-foot portfolio have closed and the sale of the last asset in Billings, Mont., is slated for December. The Billings property is a two-building, 149,110-square-foot office asset leased to the U.S. Department of Interior.

The total weighted average age of all 10 properties in the portfolio is 14 years. They are 99 percent leased to the U.S. government with a weighted average remaining lease term of 7.9 years. The disposition portfolio features a mix of tenant agencies, asset type, lease roll and geographic exposure.

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Easterly, a Washington, D.C.,-based REIT that focuses primarily on the acquisition, development and management of Class A commercial properties leased to U.S. government agencies, did not disclose the buyer or buyers of the office, laboratory and outpatient properties that are located in seven states. The REIT either leases directly to the agencies or through the U.S. General Services Administration.

William Trimble III, Easterly’s CEO, said in a prepared statement the portfolio disposition exemplifies Easterly’s disciplined adherence to its bullseye strategy and will enhance the REIT’s portfolio across several metrics, including weighted average remaining lease term. He said the sale of the assets provides Easterly with the opportunity to recycle capital and further refine the balance sheet as the investment backdrop continues to evolve.

After the last completed sale in the portfolio, Easterly is expected to own, directly or through a joint venture, 85 properties totaling 8.4 million square feet.

The nine properties that closed Oct. 27 were leased to the following agencies:

• Defense Health Agency, Aurora, Colo., a 101,285-square-foot office;
• Department of Energy, Lakewood, Colo., a 115,650-square-foot office;
• Food and Drug Administration, College Park, Md., an 80,677-square-foot laboratory;
• Occupational Safety and Health Administration, Sandy, Utah, 75,000-square-foot laboratory;
• Immigration and Customs Enforcement, Pittsburgh, 25,369-square-foot office building predominantly leased by ICE;
• Customs and Border Protection, Sunburst, Mont., 33,000-square-foot office;
• Department of Veterans Affairs, Baton Rouge, La., 30,000-square-foot outpatient facility;
• Military Entrance Processing Command, Jacksonville, Fla., 30,000-square-foot office;
• Health Resources and Services Administration, Baton Rouge, 27,000-square-foot office.

Easterly Government’s previous transactions

Three of the properties—the Pittsburgh ICE office, FDA laboratory in College Park and Baton Rouge VA outpatient facility—were part of a 14-property portfolio in 11 states acquired by Easterly in 2018 for $430 million.

During the summer, Easterly, through its joint venture with an unidentified global investor, completed the acquisition of a 67,793-square-foot outpatient facility in Columbus, Ga., leased to the VA. It was the seventh of 10 previously announced properties in a 10-asset build-to-suit portfolio that are all leased to the VA, mostly through 20-year leases. Announced in October 2021, the joint venture serves as the investment vehicle for the acquisition of an anticipated 1.2 million-square-foot portfolio of 10 properties closing on a rolling basis through 2023, for a purchase price of approximately $635.6 million. Easterly has a 53 percent stake in the joint venture.

More recently, Easterly in May acquired a 138,000-square-foot office building in Tampa, Fla., that is fully leased to the Federal Bureau of Investigation from Highwoods Properties for $70.4 million. Easterly is the largest private owner of FBI field offices, with a total of 13 out of the 56 nationwide FBI field offices.