Breaking Down Easterly Government Properties, Inc. (DEA) Financial Health: Key Insights for Investors

You're looking for stability in a shaky real estate market, and Easterly Government Properties (DEA) with its focus on government-leased assets, defintely offers a unique profile, but the numbers reveal a complex picture you need to map out now.

The company delivered a solid Q3 2025, reporting Core Funds From Operations (FFO)-the key cash flow metric for a real estate investment trust (REIT)-of $35.6 million, or $0.76 per share, right on target with analyst expectations, and they've narrowed their full-year 2025 Core FFO guidance to a tight range of $2.98 to $3.02 per share. This stability is anchored by a portfolio that boasts a 97% occupancy rate and a weighted average remaining lease term of 9.5 years; that's a rock-solid income stream from the U.S. Government, which is a great thing.

Still, you have to be a realist: the balance sheet shows total indebtedness of $1.6 billion and a Net Debt to EBITDA ratio of 7.2x, which is high leverage, and that's a near-term risk in a rising rate environment. The plan to invest up to $167 million in acquisitions and up to $75 million in development this year is a clear growth signal, but it's capital-intensive growth, so you need to understand how they manage that debt load while maintaining the attractive $0.45 per common share quarterly dividend.

Revenue Analysis

You're looking for the engine driving Easterly Government Properties, Inc. (DEA), and the answer is simple: the U.S. Government. This isn't a typical commercial real estate play where tenant turnover is a constant headache; Easterly is a specialized Real Estate Investment Trust (REIT) that generates nearly all its revenue from long-term, non-cancelable leases with high-credit federal agencies.

The primary revenue stream is straightforward: rental income from Class A commercial properties leased to the U.S. Government. This focus provides an incredibly stable, bond-like cash flow, which is the core of its investment thesis. Any growth you see comes from two main activities: annual rent escalations built into existing leases, and the strategic addition of new properties through acquisitions or development.

Looking at the most recent numbers, the Trailing Twelve Months (TTM) revenue ending Q3 2025 was a solid $334.21 million. This shows a strong year-over-year (YOY) revenue growth rate of 10.62%, which is a significant jump and defintely outpaces the broader U.S. REIT - Office sector. That's a powerful sign of a successful acquisition strategy translating directly to the top line.

Here's the quick math: that 10.62% YOY growth, translating to an extra ~$32 million in TTM revenue, is what you get when you stick to a niche with a perfect tenant. For the full fiscal year 2025, analysts are forecasting annual revenue growth to settle around 6.1%, which is still a healthy clip that reflects the stability of their portfolio plus strategic expansion.

• Primary Revenue Source: Rental income from U.S. Government leases.
• Q3 2025 Revenue: $86.2 million for the quarter.
• TTM Revenue (Q3 2025): $334.21 million, up 10.62% YOY.

The contribution of different business segments is heavily weighted toward their existing portfolio of government-leased properties. However, a significant change in their revenue stream is the increasing focus on development and government-adjacent tenants, which diversifies the portfolio slightly while maintaining the high-credit tenant profile.

For example, a key move in Q3 2025 was acquiring a 138,125 square foot facility leased 100% to York Space Systems, a government-adjacent satellite manufacturer, in Colorado. Plus, they acquired land for a new 64,000 square foot laboratory in Florida with a massive 25-year non-cancelable lease. This signals a clear strategy: use the rock-solid foundation of traditional government office leases to fund growth in higher-value, specialized assets like labs and mission-critical facilities. This shift, while small now, is where future margin expansion will come from.

To get a deeper dive into the risks and opportunities surrounding this stable revenue base, check out the full post: Breaking Down Easterly Government Properties, Inc. (DEA) Financial Health: Key Insights for Investors.

Profitability Metrics

You're looking at Easterly Government Properties, Inc. (DEA) because its government-backed leases promise stability, but you need to know if that stability translates to real profit. The short answer is yes, but the GAAP (Generally Accepted Accounting Principles) numbers show a modest net result, which is typical for a Real Estate Investment Trust (REIT). For the full 2025 fiscal year, the company reported total revenue of $315.94 million, but the profitability profile is a story of two halves-high gross efficiency followed by significant non-cash expenses.

Analyzing the core margins for 2025 shows a clear operational strength that gets diluted by the REIT structure's accounting. The Gross Margin is robust, reflecting the high-quality, long-term nature of the U.S. Government tenant base. The drop-off to the Net Margin, however, highlights the impact of depreciation and interest expense, which are often high in real estate. This is defintely where an analyst needs to look past the Net Income.

Here's the quick math: that 5.54% Net Margin is modest, and it's why you can't judge a REIT like a standard industrial company. The more telling metric for this sector is Core Funds From Operations (Core FFO), which strips out those non-cash items like depreciation, giving you a clearer view of cash flow and dividend capacity. For 2025, Easterly Government Properties reaffirmed its full-year Core FFO per share guidance in the range of $2.98 to $3.02. This is the number that matters for shareholder value, not the low Net Margin.

When you compare this to the broader industry, Easterly Government Properties' operational efficiency looks strong, but its final profitability ratio is low. The high Gross Margin of 67.16% is a direct result of its cost management and the stable revenue from its government leases, which are essentially credit-risk-free. This is what we call operational leverage in action. Industry-wide, listed REITs reported a 4.8% year-over-year gain in Net Operating Income (NOI) for the second quarter of 2025, showing that Easterly's focus on mission-critical infrastructure is keeping pace with, or even exceeding, the sector's operational strength.

The trend in profitability is stable, driven by disciplined growth. Management is executing a strategy of acquiring operating properties-they purchased $141 million in properties year-to-date-and investing in development, which will drive future earnings. This focus on expanding the asset base with long-term, non-cancelable leases is the key to maintaining that high gross margin trend. You should read more about the strategic implications of these numbers in Breaking Down Easterly Government Properties, Inc. (DEA) Financial Health: Key Insights for Investors.

The main takeaway is simple:

• Gross Margin shows business quality.
• Net Margin shows accounting structure.
• Core FFO shows investor value.

Your action here should be to monitor the Core FFO growth trajectory, which management projects at 2% to 3% for 2025, not the GAAP Net Income.

Debt vs. Equity Structure

You're looking at Easterly Government Properties, Inc. (DEA)'s balance sheet to figure out how they fund their growth, and honestly, the picture is one of high leverage, but it's anchored by rock-solid, long-term government leases. That's the key difference. The company relies heavily on debt, but it's debt backed by the AAA-rated credit of the U.S. Government.

As of the third quarter of 2025, Easterly Government Properties' total indebtedness stood at approximately $1.6 billion, balanced against a total equity of roughly $1.38 billion. Here's the quick math: that gives you a calculated Debt-to-Equity ratio of about 1.16:1. For a Real Estate Investment Trust (REIT), especially one with such stable, long-term tenants, this level of leverage is considered manageable, even if it's higher than the average for the broader REIT universe.

The company's debt profile is mostly long-term, which is smart in a high-rate environment. You don't want a ton of debt coming due all at once. Their outstanding debt has a weighted average maturity of just 4.4 years and a weighted average interest rate of 4.7% as of Q3 2025. Compare that 4.4 years to the industry-wide weighted average term to maturity of 6.2 years, and you see Easterly Government Properties is a bit shorter on debt duration than the average REIT.

Here is a breakdown of their leverage and how it stacks up against the industry standard for REITs:

Their management team is defintely aware of the leverage perception. They've stated a medium-term cash leverage goal to reduce their Adjusted Net Debt to EBITDA ratio to 6x, down from the historical range of 7x to 8x. This move is all about improving comparability with peers and structurally lowering their cost of capital, which is a clear, actionable goal.

Balancing Debt and Equity Funding

Easterly Government Properties uses a mix of debt and equity to fund its strategic acquisitions and development pipeline, which is projected to include approximately $167 million in wholly-owned acquisitions for the full year 2025. Their debt-financing strategy this year has been very active, focusing on extending maturities and securing capital.

• Secured $125 million in new senior unsecured notes in March 2025, with maturities extending to 2030 and 2032.
• Upsized the 2018 senior unsecured term loan to $200 million and extended its maturity to August 2028.
• KBRA reaffirmed their investment-grade credit rating of BBB with a Stable Outlook in October 2025, which helps keep their borrowing costs in check.

On the equity side, they raised approximately $16.8 million in net proceeds during Q3 2025 by settling shares through their At-The-Market (ATM) program. They use this equity funding to help finance new properties and development projects, like the new 64,000 square foot laboratory in Fort Myers, Florida. They are balancing the lower cost of debt against the dilution risk of issuing new equity, a trade-off every REIT faces. The key takeaway for you is that while the leverage is high, the stability of their core business-leasing to the U.S. Government-is what makes this capital structure work. You can read more about the company's overall health in the full post: Breaking Down Easterly Government Properties, Inc. (DEA) Financial Health: Key Insights for Investors.

Liquidity and Solvency

You're looking at Easterly Government Properties, Inc. (DEA) and asking the right question: can they cover their near-term obligations while still funding growth? The short answer is that while their traditional liquidity ratios look tight, the stability of their core business-leasing to the U.S. Government-provides a significant, often-overlooked cushion.

The core of a Real Estate Investment Trust (REIT) is its property portfolio, so traditional liquidity metrics (like the current ratio) often paint an incomplete picture. Still, we must look at the numbers. As of the most recent quarter in 2025, Easterly Government Properties' Current Ratio sits at 0.90. This means for every dollar of current liabilities (debt due in the next year), they only have 90 cents in current assets to cover it. The Quick Ratio is even lower at 0.55, which excludes less-liquid assets like prepaid expenses. That's a red flag in any other industry.

Here's the quick math: a current ratio below 1.0 translates directly into negative working capital (current assets minus current liabilities). This trend suggests Easterly Government Properties is relying on longer-term financing or their consistent cash flow to manage short-term payables, which is common for a growth-focused REIT. They are defintely running lean.

The true story is in the cash flow statement. For the trailing twelve months (TTM) ending Q3 2025, the company generated $241.82 million in Cash Flow from Operating Activities (CFO). This is the cash generated from their primary business-renting properties-and it's strong and highly predictable because the U.S. Government is the tenant, backed by long-term leases.

• Operating Cash Flow: $241.82 million (TTM Q3 2025).
• Investing Cash Flow: -$415.96 million (TTM Q3 2025).
• Financing Cash Flow: Used for debt and dividends.

The Investing Cash Flow is a substantial negative $415.96 million, primarily due to strategic acquisitions and development, such as the new lab in Fort Myers, Florida, and the York Space Systems facility in Colorado. This is a choice, not a crisis; they are aggressively deploying capital to grow the asset base, which is the REIT growth model. To fund this, the Financing Cash Flow has been active, involving debt and equity. They raised roughly $16.8 million in net proceeds through stock settlements in Q3 2025.

The key strength here is the quality of their cash flow. Their portfolio is almost entirely leased to the U.S. Government, which has the highest credit rating. This predictable, high-quality rent roll mitigates the risk implied by the tight current and quick ratios. The potential liquidity concern isn't default, but rather a reliance on the credit facility (a line of credit) to bridge the gap between their large, strategic investments and the consistent but slower pace of operating cash generation. You can see more on their long-term strategy in their Mission Statement, Vision, & Core Values of Easterly Government Properties, Inc. (DEA).

The action for you is to monitor their debt maturity schedule and the cost of new debt. Their liquidity is a function of their borrowing capacity and the rock-solid nature of their rent payments, not just the cash on hand.

Valuation Analysis

The short answer is that Easterly Government Properties, Inc. (DEA) presents a mixed valuation picture right now, leading to a consensus Hold rating from Wall Street analysts. While its price-to-book ratio suggests it is defintely trading at a discount, the high GAAP price-to-earnings ratio flags a significant risk that you need to understand before making a move. The average one-year price target is $26.41, suggesting a potential upside of over 25% from the recent price of around $21.00 as of November 2025.

Decoding the Valuation Multiples

You can't value a Real Estate Investment Trust (REIT) like Easterly Government Properties, Inc. using only traditional metrics, but they still tell a story. The trailing price-to-earnings (P/E) ratio sits extremely high at 69.71, which would scream massive overvaluation for a normal company. However, for REITs, you must look at the price-to-Funds From Operations (P/FFO) multiple, which is the industry standard for measuring cash flow performance.

Here's the quick math: the forward P/FFO is a much more palatable 6.93, which is quite low for a stable, government-backed real estate portfolio. Also, the price-to-book (P/B) ratio is only 0.73, meaning the stock trades for less than its accounting book value. The enterprise value-to-EBITDA (EV/EBITDA) multiple, which looks at the total value of the company including debt against its core earnings, is 13.70, which is moderate. A P/B under 1.0 is a strong signal of potential undervaluation.

• P/B below 1.0 indicates a discount to book value.
• P/FFO of 6.93 suggests cheap cash flow.
• EV/EBITDA of 13.70 is a balanced signal.

Stock Price and Analyst Sentiment

The stock has had a rough 12 months. Over the last year leading up to November 2025, the share price has decreased by 34.85%, reflecting broader market concerns about interest rates and the sustainability of its dividend. The stock traded in a wide range, hitting a 12-month low of $19.33 and a high of $31.77. This volatility shows the market is still wrestling with the company's true value in a high-rate environment.

Despite the recent price drop, the analyst consensus is a Hold, based on a split of ratings from six firms: two Buy, two Hold, and two Sell. This isn't a ringing endorsement, but the average price target of $26.41 still points to a healthy recovery if the company can execute on its strategy of stable, government-leased assets. You can see more about that strategy in the Mission Statement, Vision, & Core Values of Easterly Government Properties, Inc. (DEA).

Dividend Sustainability: The Core Risk

The dividend yield is attractive, currently sitting at about 8.6% based on an annualized payout of $1.80 per share. But this is where precision matters. The dividend payout ratio based on net income (Earnings Per Share or EPS) is an alarming 600% or more. This is the major risk the market is pricing in.

What this estimate hides is that REITs are legally required to pay out most of their taxable income, and net income often understates their true cash flow because of non-cash depreciation. The real measure of sustainability is the payout ratio against FFO or Adjusted FFO (AFFO). While the search results provide conflicting numbers, the extremely high EPS-based ratio is a clear warning that the dividend is not covered by standard accounting earnings and is under pressure. If the company cannot maintain its FFO, a dividend cut is defintely on the table. The high yield is compensation for that risk.

Next Step: Finance/Investor Relations: Prepare a detailed FFO-to-AFFO reconciliation for the last four quarters to confirm the true cash flow coverage of the dividend by the end of the week.

Risk Factors

You're looking for the catch, right? With Easterly Government Properties, Inc. (DEA), you get the stability of long-term U.S. Government leases, but that stability comes with its own specific set of financial and political risks you need to map out. The core takeaway is that while the income stream is rock-solid, the cost of funding new growth is the near-term pressure point.

Here's the quick math: DEA's full-year 2025 Core Funds From Operations (FFO) per share is projected to land between $2.98 and $3.02, a solid performance. But the real story is what it costs to maintain and grow that. You need to focus on three key areas: capital structure, government politics, and market competition.

Financial and Capital Structure Risks

The biggest immediate headwind is the company's debt load and the cost of capital. DEA has historically run with higher leverage than many of its REIT peers, which is manageable because the U.S. Government is the ultimate credit tenant. Still, perception matters, and high debt limits flexibility. As of the third quarter of 2025, the Adjusted Net Debt to annualized quarterly pro forma EBITDA ratio stood at 7.2x.

To be fair, management is defintely aware of this and is targeting a medium-term cash leverage goal of 6x, a significant drop from their historical 7x to 8x range. Plus, capital costs are high right now, with management citing rates 'in the 8s' percent range, which puts pressure on new acquisition returns. This is why the dividend reset earlier in 2025, while painful for investors, was a necessary step to align the payout with a more sustainable funding model for future growth.

• High Leverage: Adjusted Net Debt to EBITDA is 7.2x.
• Cost of Capital: Elevated interest rates compress returns on new deals.
• Total Indebtedness: Approximately $1.7 billion as of June 30, 2025.

Regulatory and External Risks

The primary external risk is political volatility, specifically the potential for a government shutdown or budget cuts. A shutdown, like the one discussed in the Q3 2025 earnings call, can slow down leasing and development activities. However, the risk to the cash flow is minimal because the government will not default on its lease obligations-it's essentially a U.S. Treasury obligation.

You also hear a lot about the Department of Government Efficiency (DOGE) initiative and fears of massive government downsizing. DEA's management has largely dismissed this as 'Kabuki theater' related to budget negotiations, noting that actual lease cancellations due to DOGE have been minimal. The company's portfolio occupancy remains high, near 97%, with a weighted average remaining lease term of 9.5 years as of September 30, 2025. That long-term lease structure is your main defense against political noise.

Strategic Mitigation and Opportunity

The company's mitigation plan is clear: diversify and execute on value-add developments. They are actively expanding their exposure into state and local government tenancy, as well as high-credit government-adjacent partners, such as the acquisition of the York Space Systems headquarters in Colorado. This diversification is key to reducing reliance solely on the General Services Administration (GSA).

The other major lever is their development pipeline, which creates portfolio-enhancing improvements to weighted average lease terms. For 2025, they assumed $25 million to $75 million of gross development-related investment. This includes projects like the state Crime Lab in Fort Myers, Florida, which comes with a 25-year non-cancelable lease. They are also focused on growing Core FFO by 2% to 3% annually.

For a deeper dive into who is betting on this strategy, you should read Exploring Easterly Government Properties, Inc. (DEA) Investor Profile: Who's Buying and Why?

Growth Opportunities

You're looking for a clear path to growth, not just a steady dividend, and Easterly Government Properties, Inc. (DEA) is defintely executing a disciplined strategy to deliver on that. The direct takeaway is that their growth is baked into their long-term, non-cancelable leases, but the real upside comes from their calculated expansion into high-credit, government-adjacent real estate and development.

Management is targeting a Core Funds From Operations (Core FFO) growth of 2% to 3% annually, which is a solid, predictable clip for a Real Estate Investment Trust (REIT) focused on the government sector. For the 2025 fiscal year, the company has narrowed its Core FFO per share guidance to a range of $2.98 to $3.02, reflecting a strong 3% growth over 2024 at the midpoint. This stability is a direct result of their tenant base: the U.S. Government. You simply don't get a more reliable tenant than that.

Here's the quick math on their portfolio expansion: Easterly Government Properties, Inc. (DEA) plans to invest up to $167 million in wholly-owned acquisitions and between $25 million and $75 million in gross development-related investments during 2025. This capital deployment is the engine for future earnings growth.

The company's strategy is centered on three key growth drivers, moving beyond a pure-play federal focus to capture higher-yield opportunities without sacrificing credit quality. This diversification is smart. They are aiming to allocate up to 15% of their portfolio to government-adjacent tenants over the next few years.

• Diversify Tenant Base: Expanding into state and local government leases, targeting up to 30% of the portfolio in this space.
• Strategic Acquisitions: Acquiring properties like the facility leased to York Space Systems in Colorado, which services the U.S. Defense and Space partners.
• Value-Creating Development: Undertaking build-to-suit projects with long-term, non-cancelable leases, such as the 64,000 square foot laboratory for the Florida Department of Law Enforcement (FDLE) with a 25-year lease.

The core competitive advantage is their specialization in Class A, mission-critical facilities for agencies like the FBI and Veterans Administration. This focus means their properties are less likely to be declared surplus, especially with the federal government's Disposal of Excess Government Properties (DOGE) initiative encouraging a greater reliance on leased real estate. This is a clear tailwind for their business model.

Their portfolio's weighted average remaining lease term is approximately 10 years, and occupancy remains near historical highs at 97%. That kind of stability in the real estate sector is a rare commodity, and it provides a strong foundation for their growth targets.

To see the foundation of their operational focus, you can review their Mission Statement, Vision, & Core Values of Easterly Government Properties, Inc. (DEA).

For a clearer picture of their near-term financial trajectory, here is a summary of the 2025 fiscal year estimates based on the latest company and analyst guidance:

What this estimate hides is the long-term impact of the new development pipeline, like the federal courthouse project in Medford, Oregon, which comes with a 20-year non-cancelable lease. These projects lock in decades of predictable cash flow, which is how you build long-term shareholder value. Still, the leverage is something to watch, but the stable government cash flows provide a significant cushion.

Next Step: Review the Core FFO reconciliation to understand the quality of the $2.98 to $3.02 guidance, specifically looking at non-cash adjustments and recurring capital expenditures.